Correlation Between Cedar Realty and Take Two

Can any of the company-specific risk be diversified away by investing in both Cedar Realty and Take Two 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 Cedar Realty and Take Two into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cedar Realty Trust and Take Two Interactive Software, you can compare the effects of market volatilities on Cedar Realty and Take Two 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 Cedar Realty with a short position of Take Two. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cedar Realty and Take Two.

Diversification Opportunities for Cedar Realty and Take Two

0.35

Correlation Coefficient

Cedar Realty  Take Two

Weak diversification

The 3 months correlation between Cedar and Take is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Cedar Realty Trust and Take Two Interactive Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Take Two Interactive and Cedar Realty 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 Cedar Realty Trust are associated (or correlated) with Take Two. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Take Two Interactive has no effect on the direction of Cedar Realty i.e., Cedar Realty and Take Two go up and down completely randomly.

Pair Corralation between Cedar Realty and Take Two

Assuming the 90 days trading horizon Cedar Realty is expected to generate 1.25 times less return on investment than Take Two. In addition to that, Cedar Realty is 1.74 times more volatile than Take Two Interactive Software. It trades about 0.03 of its total potential returns per unit of risk. Take Two Interactive Software is currently generating about 0.07 per unit of volatility. If you would invest  11,225  in Take Two Interactive Software on October 23, 2024 and sell it today you would earn a total of  7,416  from holding Take Two Interactive Software or generate 66.07% return on investment over 90 days.

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

Cedar Realty Trust  vs.  Take Two Interactive Software

Cedar Realty Trust

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cedar Realty Trust are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Cedar Realty may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Take Two Interactive

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Take Two Interactive Software are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, Take Two displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cedar Realty and Take Two

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

The idea behind Cedar Realty Trust and Take Two Interactive Software 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.