Correlation Between Take Two and Mitie Group

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

Diversification Opportunities for Take Two and Mitie Group

-0.34

Correlation Coefficient

Take Two  Mitie Group

Very good diversification

The 3 months correlation between Take and Mitie is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Take Two Interactive Software and Mitie Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitie Group PLC 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 Mitie Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitie Group PLC has no effect on the direction of Take Two i.e., Take Two and Mitie Group go up and down completely randomly.

Pair Corralation between Take Two and Mitie Group

Assuming the 90 days horizon Take Two Interactive Software is expected to generate 0.73 times more return on investment than Mitie Group. However, Take Two Interactive Software is 1.36 times less risky than Mitie Group. It trades about 0.19 of its potential returns per unit of risk. Mitie Group PLC is currently generating about 0.05 per unit of risk. If you would invest  14,896  in Take Two Interactive Software on October 26, 2024 and sell it today you would earn a total of  2,662  from holding Take Two Interactive Software or generate 17.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Take Two Interactive Software  vs.  Mitie Group PLC

Take Two Interactive

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Take Two Interactive Software are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Take Two reported solid returns over the last few months and may actually be approaching a breakup point.

Mitie Group PLC

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mitie Group PLC are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Mitie Group may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Take Two and Mitie Group

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

The idea behind Take Two Interactive Software and Mitie Group PLC 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.