Correlation Between Take Two and JB Hunt
Can any of the company-specific risk be diversified away by investing in both Take Two and JB Hunt 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 JB Hunt 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 JB Hunt Transport, you can compare the effects of market volatilities on Take Two and JB Hunt 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 JB Hunt. Check out your portfolio center. Please also check ongoing floating volatility patterns of Take Two and JB Hunt.
Diversification Opportunities for Take Two and JB Hunt
Poor diversification
The 3 months correlation between Take and 0J71 is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Take Two Interactive Software and JB Hunt Transport in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JB Hunt Transport 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 JB Hunt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JB Hunt Transport has no effect on the direction of Take Two i.e., Take Two and JB Hunt go up and down completely randomly.
Pair Corralation between Take Two and JB Hunt
Assuming the 90 days trading horizon Take Two Interactive Software is expected to generate 0.81 times more return on investment than JB Hunt. However, Take Two Interactive Software is 1.24 times less risky than JB Hunt. It trades about 0.23 of its potential returns per unit of risk. JB Hunt Transport is currently generating about -0.01 per unit of risk. If you would invest 14,995 in Take Two Interactive Software on September 25, 2024 and sell it today you would earn a total of 3,234 from holding Take Two Interactive Software or generate 21.57% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Take Two Interactive Software vs. JB Hunt Transport
Performance |
Timeline |
Take Two Interactive |
JB Hunt Transport |
Take Two and JB Hunt Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Take Two and JB Hunt
The main advantage of trading using opposite Take Two and JB Hunt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Take Two position performs unexpectedly, JB Hunt 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 JB Hunt will offset losses from the drop in JB Hunt's long position.Take Two vs. Uniper SE | Take Two vs. Mulberry Group PLC | Take Two vs. London Security Plc | Take Two vs. Triad Group PLC |
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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