Correlation Between Take Two and Pets At

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

Diversification Opportunities for Take Two and Pets At

0.82

Correlation Coefficient

Take Two  Pets At

Very poor diversification

The 3 months correlation between Take and Pets is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Take Two Interactive Software and Pets at Home in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pets at Home 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 Pets At. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pets at Home has no effect on the direction of Take Two i.e., Take Two and Pets At go up and down completely randomly.

Pair Corralation between Take Two and Pets At

Assuming the 90 days trading horizon Take Two is expected to generate 1.01 times less return on investment than Pets At. In addition to that, Take Two is 1.27 times more volatile than Pets at Home. It trades about 0.1 of its total potential returns per unit of risk. Pets at Home is currently generating about 0.13 per unit of volatility. If you would invest  20,460  in Pets at Home on December 30, 2024 and sell it today you would earn a total of  3,180  from holding Pets at Home or generate 15.54% return on investment over 90 days.

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

Take Two Interactive Software  vs.  Pets at Home

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 uncertain basic indicators, Take Two unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pets at Home

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pets at Home are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Pets At unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Take Two and Pets At

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

The idea behind Take Two Interactive Software and Pets at Home 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.

Check out your portfolio center.

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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.