Correlation Between Take Two and CANADA RARE

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

Diversification Opportunities for Take Two and CANADA RARE

0.3

Correlation Coefficient

Take Two  CANADA RARE

Weak diversification

The 3 months correlation between Take and CANADA is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Take Two Interactive Software and CANADA RARE EARTH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CANADA RARE EARTH 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 CANADA RARE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CANADA RARE EARTH has no effect on the direction of Take Two i.e., Take Two and CANADA RARE go up and down completely randomly.

Pair Corralation between Take Two and CANADA RARE

Assuming the 90 days horizon Take Two Interactive Software is expected to generate 0.09 times more return on investment than CANADA RARE. However, Take Two Interactive Software is 10.92 times less risky than CANADA RARE. It trades about -0.06 of its potential returns per unit of risk. CANADA RARE EARTH is currently generating about -0.33 per unit of risk. If you would invest  17,830  in Take Two Interactive Software on October 27, 2024 and sell it today you would lose (308.00) from holding Take Two Interactive Software or give up 1.73% of portfolio value over 90 days.

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

Take Two Interactive Software  vs.  CANADA RARE EARTH

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 uncertain basic indicators, Take Two reported solid returns over the last few months and may actually be approaching a breakup point.

CANADA RARE EARTH

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CANADA RARE EARTH are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, CANADA RARE reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Take Two and CANADA RARE

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

The idea behind Take Two Interactive Software and CANADA RARE EARTH 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..