Correlation Between Take Two and Kenvue

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

Diversification Opportunities for Take Two and Kenvue

0.39

Correlation Coefficient

Take Two  Kenvue

Weak diversification

The 3 months correlation between Take and Kenvue is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Take Two Interactive Software and Kenvue Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kenvue 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 Kenvue. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kenvue Inc has no effect on the direction of Take Two i.e., Take Two and Kenvue go up and down completely randomly.

Pair Corralation between Take Two and Kenvue

Given the investment horizon of 90 days Take Two Interactive Software is expected to generate 1.48 times more return on investment than Kenvue. However, Take Two is 1.48 times more volatile than Kenvue Inc. It trades about -0.02 of its potential returns per unit of risk. Kenvue Inc is currently generating about -0.47 per unit of risk. If you would invest  19,003  in Take Two Interactive Software on October 6, 2024 and sell it today you would lose (128.00) from holding Take Two Interactive Software or give up 0.67% 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.  Kenvue Inc

Take Two Interactive

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Take Two Interactive Software are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, Take Two displayed solid returns over the last few months and may actually be approaching a breakup point.

Kenvue Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kenvue Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Kenvue is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Take Two and Kenvue

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

The idea behind Take Two Interactive Software and Kenvue 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.