Correlation Between Take Two and Endeavour Mining

Can any of the company-specific risk be diversified away by investing in both Take Two and Endeavour Mining at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Take Two and Endeavour Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Take Two Interactive Software and Endeavour Mining Corp, you can compare the effects of market volatilities on Take Two and Endeavour Mining and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Take Two with a short position of Endeavour Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Take Two and Endeavour Mining.

Diversification Opportunities for Take Two and Endeavour Mining

0.74

Correlation Coefficient

Take Two  Endeavour Mining

Poor diversification

The 3 months correlation between Take and Endeavour is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Take Two Interactive Software and Endeavour Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Endeavour Mining Corp and Take Two is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Take Two Interactive Software are associated (or correlated) with Endeavour Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Endeavour Mining Corp has no effect on the direction of Take Two i.e., Take Two and Endeavour Mining go up and down completely randomly.

Pair Corralation between Take Two and Endeavour Mining

Assuming the 90 days trading horizon Take Two is expected to generate 1.44 times less return on investment than Endeavour Mining. In addition to that, Take Two is 1.07 times more volatile than Endeavour Mining Corp. It trades about 0.1 of its total potential returns per unit of risk. Endeavour Mining Corp is currently generating about 0.15 per unit of volatility. If you would invest  143,200  in Endeavour Mining Corp on December 24, 2024 and sell it today you would earn a total of  29,300  from holding Endeavour Mining Corp or generate 20.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Take Two Interactive Software  vs.  Endeavour Mining Corp

Take Two Interactive

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Take Two Interactive Software are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Take Two unveiled solid returns over the last few months and may actually be approaching a breakup point.

Endeavour Mining Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Endeavour Mining Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Endeavour Mining exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Take Two and Endeavour Mining

The main advantage of trading using opposite Take Two and Endeavour Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Take Two position performs unexpectedly, Endeavour Mining can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Endeavour Mining will offset losses from the drop in Endeavour Mining's long position.

The idea behind Take Two Interactive Software and Endeavour Mining Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.