Correlation Between Take Two and Ameriprise Financial

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

Diversification Opportunities for Take Two and Ameriprise Financial

0.9

Correlation Coefficient

Take Two  Ameriprise Financial

Almost no diversification

The 3 months correlation between Take and Ameriprise is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Take Two Interactive Software and Ameriprise Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ameriprise Financial 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 Ameriprise Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ameriprise Financial has no effect on the direction of Take Two i.e., Take Two and Ameriprise Financial go up and down completely randomly.

Pair Corralation between Take Two and Ameriprise Financial

Assuming the 90 days trading horizon Take Two Interactive Software is expected to generate 1.25 times more return on investment than Ameriprise Financial. However, Take Two is 1.25 times more volatile than Ameriprise Financial. It trades about 0.08 of its potential returns per unit of risk. Ameriprise Financial is currently generating about 0.1 per unit of risk. If you would invest  13,991  in Take Two Interactive Software on September 4, 2024 and sell it today you would earn a total of  14,404  from holding Take Two Interactive Software or generate 102.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	96.2%
Values	Daily Returns

Take Two Interactive Software  vs.  Ameriprise Financial

Take Two Interactive

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Take Two Interactive Software are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Take Two sustained solid returns over the last few months and may actually be approaching a breakup point.

Ameriprise Financial

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Ameriprise Financial are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain primary indicators, Ameriprise Financial sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Take Two and Ameriprise Financial

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

The idea behind Take Two Interactive Software and Ameriprise Financial 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.