Correlation Between River and Take Two

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

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

Diversification Opportunities for River and Take Two

0.8

Correlation Coefficient

River  Take Two

Very poor diversification

The 3 months correlation between River and Take is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding River and Mercantile 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 River 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 River and Mercantile 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 River i.e., River and Take Two go up and down completely randomly.

Pair Corralation between River and Take Two

Assuming the 90 days trading horizon River and Mercantile is expected to generate 0.09 times more return on investment than Take Two. However, River and Mercantile is 10.68 times less risky than Take Two. It trades about -0.23 of its potential returns per unit of risk. Take Two Interactive Software is currently generating about -0.06 per unit of risk. If you would invest  17,850  in River and Mercantile on October 6, 2024 and sell it today you would lose (100.00) from holding River and Mercantile or give up 0.56% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.0%
Values	Daily Returns

River and Mercantile  vs.  Take Two Interactive Software

River and Mercantile

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in River and Mercantile are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, River is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

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

Pair Trading with River and Take Two

The main advantage of trading using opposite River and Take Two positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if River 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 River and Mercantile 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.