Correlation Between Take Two and Eagle Eye

Can any of the company-specific risk be diversified away by investing in both Take Two and Eagle Eye 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 Eagle Eye 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 Eagle Eye Solutions, you can compare the effects of market volatilities on Take Two and Eagle Eye 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 Eagle Eye. Check out your portfolio center. Please also check ongoing floating volatility patterns of Take Two and Eagle Eye.

Diversification Opportunities for Take Two and Eagle Eye

-0.4

Correlation Coefficient

Take Two  Eagle Eye

Very good diversification

The 3 months correlation between Take and Eagle is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Take Two Interactive Software and Eagle Eye Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagle Eye Solutions 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 Eagle Eye. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eagle Eye Solutions has no effect on the direction of Take Two i.e., Take Two and Eagle Eye go up and down completely randomly.

Pair Corralation between Take Two and Eagle Eye

Assuming the 90 days trading horizon Take Two Interactive Software is expected to generate 0.71 times more return on investment than Eagle Eye. However, Take Two Interactive Software is 1.42 times less risky than Eagle Eye. It trades about 0.11 of its potential returns per unit of risk. Eagle Eye Solutions is currently generating about -0.11 per unit of risk. If you would invest  18,228  in Take Two Interactive Software on December 21, 2024 and sell it today you would earn a total of  2,794  from holding Take Two Interactive Software or generate 15.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.83%
Values	Daily Returns

Take Two Interactive Software  vs.  Eagle Eye Solutions

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 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Take Two unveiled solid returns over the last few months and may actually be approaching a breakup point.

Eagle Eye Solutions

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eagle Eye Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Take Two and Eagle Eye

The main advantage of trading using opposite Take Two and Eagle Eye positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Take Two position performs unexpectedly, Eagle Eye 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 Eagle Eye will offset losses from the drop in Eagle Eye's long position.

The idea behind Take Two Interactive Software and Eagle Eye Solutions 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.