Correlation Between Take Two and Huntington Ingalls

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

Diversification Opportunities for Take Two and Huntington Ingalls

-0.67

Correlation Coefficient

Take Two  Huntington Ingalls

Excellent diversification

The 3 months correlation between Take and Huntington is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Take Two Interactive Software and Huntington Ingalls Industries, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huntington Ingalls 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 Huntington Ingalls. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huntington Ingalls has no effect on the direction of Take Two i.e., Take Two and Huntington Ingalls go up and down completely randomly.

Pair Corralation between Take Two and Huntington Ingalls

Assuming the 90 days trading horizon Take Two Interactive Software is expected to generate 0.88 times more return on investment than Huntington Ingalls. However, Take Two Interactive Software is 1.13 times less risky than Huntington Ingalls. It trades about 0.05 of its potential returns per unit of risk. Huntington Ingalls Industries, is currently generating about 0.01 per unit of risk. If you would invest  28,980  in Take Two Interactive Software on December 25, 2024 and sell it today you would earn a total of  1,865  from holding Take Two Interactive Software or generate 6.44% return on investment over 90 days.

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

Take Two Interactive Software  vs.  Huntington Ingalls Industries,

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 3 (%) 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.

Huntington Ingalls

Risk-Adjusted Performance

Very Weak

Over the last 90 days Huntington Ingalls Industries, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward indicators, Huntington Ingalls is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Take Two and Huntington Ingalls

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

The idea behind Take Two Interactive Software and Huntington Ingalls Industries, 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.