Correlation Between Take Two and ASML Holding

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

Diversification Opportunities for Take Two and ASML Holding

-0.35

Correlation Coefficient

Take Two  ASML Holding

Very good diversification

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

Pair Corralation between Take Two and ASML Holding

Assuming the 90 days trading horizon Take Two Interactive Software is expected to generate 1.11 times more return on investment than ASML Holding. However, Take Two is 1.11 times more volatile than ASML Holding NV. It trades about 0.06 of its potential returns per unit of risk. ASML Holding NV is currently generating about -0.04 per unit of risk. If you would invest  28,196  in Take Two Interactive Software on December 22, 2024 and sell it today you would earn a total of  2,418  from holding Take Two Interactive Software or generate 8.58% return on investment over 90 days.

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

Take Two Interactive Software  vs.  ASML Holding NV

Take Two Interactive

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Take Two Interactive Software are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Take Two may actually be approaching a critical reversion point that can send shares even higher in April 2025.

ASML Holding NV

Risk-Adjusted Performance

Very Weak

Over the last 90 days ASML Holding NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's primary indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Take Two and ASML Holding

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

The idea behind Take Two Interactive Software and ASML Holding NV 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.