Correlation Between Take Two and W P

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

Diversification Opportunities for Take Two and W P

0.14

Correlation Coefficient

Take Two  W P

Average diversification

The 3 months correlation between Take and WPY is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Take Two Interactive Software and W P Carey in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on W P Carey 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 W P. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of W P Carey has no effect on the direction of Take Two i.e., Take Two and W P go up and down completely randomly.

Pair Corralation between Take Two and W P

Assuming the 90 days horizon Take Two is expected to generate 2.62 times less return on investment than W P. In addition to that, Take Two is 1.48 times more volatile than W P Carey. It trades about 0.09 of its total potential returns per unit of risk. W P Carey is currently generating about 0.35 per unit of volatility. If you would invest  5,147  in W P Carey on October 24, 2024 and sell it today you would earn a total of  307.00  from holding W P Carey or generate 5.96% return on investment over 90 days.

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

Take Two Interactive Software  vs.  W P Carey

Take Two Interactive

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Take Two Interactive Software are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Take Two reported solid returns over the last few months and may actually be approaching a breakup point.

W P Carey

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in W P Carey are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, W P is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Take Two and W P

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

The idea behind Take Two Interactive Software and W P Carey 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.