Correlation Between Take-Two Interactive and Materialise

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

Diversification Opportunities for Take-Two Interactive and Materialise

0.96

Correlation Coefficient

Take-Two Interactive  Materialise

Almost no diversification

The 3 months correlation between Take-Two and Materialise is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Take Two Interactive Software and Materialise NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Materialise NV and Take-Two Interactive 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 Materialise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Materialise NV has no effect on the direction of Take-Two Interactive i.e., Take-Two Interactive and Materialise go up and down completely randomly.

Pair Corralation between Take-Two Interactive and Materialise

Assuming the 90 days horizon Take Two Interactive Software is expected to generate 0.58 times more return on investment than Materialise. However, Take Two Interactive Software is 1.71 times less risky than Materialise. It trades about 0.07 of its potential returns per unit of risk. Materialise NV is currently generating about 0.01 per unit of risk. If you would invest  10,148  in Take Two Interactive Software on September 27, 2024 and sell it today you would earn a total of  7,364  from holding Take Two Interactive Software or generate 72.57% return on investment over 90 days.

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

Take Two Interactive Software  vs.  Materialise NV

Take Two Interactive

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Take Two Interactive Software are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Take-Two Interactive reported solid returns over the last few months and may actually be approaching a breakup point.

Materialise NV

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Materialise NV are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Materialise unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Take-Two Interactive and Materialise

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

The idea behind Take Two Interactive Software and Materialise 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.