Correlation Between Take Two and MOBILE FACTORY

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

Diversification Opportunities for Take Two and MOBILE FACTORY

0.83

Correlation Coefficient

Take Two  MOBILE FACTORY

Very poor diversification

The 3 months correlation between Take and MOBILE is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Take Two Interactive Software and MOBILE FACTORY INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MOBILE FACTORY INC 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 MOBILE FACTORY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MOBILE FACTORY INC has no effect on the direction of Take Two i.e., Take Two and MOBILE FACTORY go up and down completely randomly.

Pair Corralation between Take Two and MOBILE FACTORY

Assuming the 90 days horizon Take Two Interactive Software is expected to generate 0.68 times more return on investment than MOBILE FACTORY. However, Take Two Interactive Software is 1.48 times less risky than MOBILE FACTORY. It trades about 0.24 of its potential returns per unit of risk. MOBILE FACTORY INC is currently generating about 0.09 per unit of risk. If you would invest  14,850  in Take Two Interactive Software on October 23, 2024 and sell it today you would earn a total of  3,382  from holding Take Two Interactive Software or generate 22.77% return on investment over 90 days.

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

Take Two Interactive Software  vs.  MOBILE FACTORY INC

Take Two Interactive

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Take Two Interactive Software are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Take Two reported solid returns over the last few months and may actually be approaching a breakup point.

MOBILE FACTORY INC

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MOBILE FACTORY INC are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, MOBILE FACTORY reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Take Two and MOBILE FACTORY

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

The idea behind Take Two Interactive Software and MOBILE FACTORY INC 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..