Correlation Between Take Two and BHP Group

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

Diversification Opportunities for Take Two and BHP Group

-0.84

Correlation Coefficient

Take Two  BHP Group

Pay attention - limited upside

The 3 months correlation between Take and BHP is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Take Two Interactive Software and BHP Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BHP Group Limited 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 BHP Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BHP Group Limited has no effect on the direction of Take Two i.e., Take Two and BHP Group go up and down completely randomly.

Pair Corralation between Take Two and BHP Group

Assuming the 90 days horizon Take Two Interactive Software is expected to generate 0.91 times more return on investment than BHP Group. However, Take Two Interactive Software is 1.09 times less risky than BHP Group. It trades about 0.0 of its potential returns per unit of risk. BHP Group Limited is currently generating about -0.27 per unit of risk. If you would invest  17,852  in Take Two Interactive Software on October 4, 2024 and sell it today you would lose (26.00) from holding Take Two Interactive Software or give up 0.15% of portfolio value over 90 days.

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

Take Two Interactive Software  vs.  BHP Group Limited

Take Two Interactive

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Take Two Interactive Software are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Take Two reported solid returns over the last few months and may actually be approaching a breakup point.

BHP Group Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BHP Group Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Take Two and BHP Group

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

The idea behind Take Two Interactive Software and BHP Group Limited 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.