Correlation Between Take Two and Roblox Corp

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

Diversification Opportunities for Take Two and Roblox Corp

-0.25

Correlation Coefficient

Take Two  Roblox Corp

Very good diversification

The 3 months correlation between Take and Roblox is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Take Two Interactive Software and Roblox Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roblox Corp 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 Roblox Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Roblox Corp has no effect on the direction of Take Two i.e., Take Two and Roblox Corp go up and down completely randomly.

Pair Corralation between Take Two and Roblox Corp

Given the investment horizon of 90 days Take Two Interactive Software is expected to generate 0.84 times more return on investment than Roblox Corp. However, Take Two Interactive Software is 1.19 times less risky than Roblox Corp. It trades about 0.12 of its potential returns per unit of risk. Roblox Corp is currently generating about 0.02 per unit of risk. If you would invest  18,454  in Take Two Interactive Software on December 28, 2024 and sell it today you would earn a total of  2,975  from holding Take Two Interactive Software or generate 16.12% return on investment over 90 days.

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

Take Two Interactive Software  vs.  Roblox Corp

Take Two Interactive

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Take Two Interactive Software are ranked lower than 9 (%) 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.

Roblox Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Roblox Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong essential indicators, Roblox Corp is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Take Two and Roblox Corp

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

The idea behind Take Two Interactive Software and Roblox Corp 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.