Correlation Between Take Two and Future Metals

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

Diversification Opportunities for Take Two and Future Metals

-0.12

Correlation Coefficient

Take Two  Future Metals

Good diversification

The 3 months correlation between Take and Future is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Take Two Interactive Software and Future Metals NL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Future Metals NL 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 Future Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Future Metals NL has no effect on the direction of Take Two i.e., Take Two and Future Metals go up and down completely randomly.

Pair Corralation between Take Two and Future Metals

Assuming the 90 days trading horizon Take Two Interactive Software is expected to generate 0.38 times more return on investment than Future Metals. However, Take Two Interactive Software is 2.64 times less risky than Future Metals. It trades about 0.15 of its potential returns per unit of risk. Future Metals NL is currently generating about -0.31 per unit of risk. If you would invest  18,159  in Take Two Interactive Software on September 18, 2024 and sell it today you would earn a total of  628.00  from holding Take Two Interactive Software or generate 3.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Take Two Interactive Software  vs.  Future Metals NL

Take Two Interactive

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Take Two Interactive Software are ranked lower than 17 (%) 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.

Future Metals NL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Future Metals NL has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Take Two and Future Metals

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

The idea behind Take Two Interactive Software and Future Metals NL 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.