Correlation Between Take Two and Paccar

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

Diversification Opportunities for Take Two and Paccar

0.81

Correlation Coefficient

Take Two  Paccar

Very poor diversification

The 3 months correlation between Take and Paccar is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Take Two Interactive Software and Paccar Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paccar 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 Paccar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paccar Inc has no effect on the direction of Take Two i.e., Take Two and Paccar go up and down completely randomly.

Pair Corralation between Take Two and Paccar

Assuming the 90 days trading horizon Take Two Interactive Software is expected to generate 1.04 times more return on investment than Paccar. However, Take Two is 1.04 times more volatile than Paccar Inc. It trades about -0.07 of its potential returns per unit of risk. Paccar Inc is currently generating about -0.33 per unit of risk. If you would invest  18,882  in Take Two Interactive Software on September 25, 2024 and sell it today you would lose (348.00) from holding Take Two Interactive Software or give up 1.84% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.45%
Values	Daily Returns

Take Two Interactive Software  vs.  Paccar Inc

Take Two Interactive

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Take Two Interactive Software are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Take Two unveiled solid returns over the last few months and may actually be approaching a breakup point.

Paccar Inc

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Paccar Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Paccar may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Take Two and Paccar

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

The idea behind Take Two Interactive Software and Paccar 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.