Correlation Between Polar Capital and Take Two

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

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

Diversification Opportunities for Polar Capital and Take Two

0.96

Correlation Coefficient

Polar Capital  Take Two

Almost no diversification

The 3 months correlation between Polar and Take is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Polar Capital Technology 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 Polar Capital 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 Polar Capital Technology 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 Polar Capital i.e., Polar Capital and Take Two go up and down completely randomly.

Pair Corralation between Polar Capital and Take Two

Assuming the 90 days trading horizon Polar Capital Technology is expected to generate 0.84 times more return on investment than Take Two. However, Polar Capital Technology is 1.2 times less risky than Take Two. It trades about 0.04 of its potential returns per unit of risk. Take Two Interactive Software is currently generating about -0.08 per unit of risk. If you would invest  34,450  in Polar Capital Technology on September 23, 2024 and sell it today you would earn a total of  250.00  from holding Polar Capital Technology or generate 0.73% return on investment over 90 days.

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

Polar Capital Technology  vs.  Take Two Interactive Software

Polar Capital Technology

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Polar Capital Technology are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Polar Capital exhibited solid returns over the last few months and may actually be approaching a breakup point.

Take Two Interactive

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Take Two Interactive Software are ranked lower than 19 (%) 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.

Pair Trading with Polar Capital and Take Two

The main advantage of trading using opposite Polar Capital and Take Two positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Polar Capital 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 Polar Capital Technology 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.