Correlation Between Bell Food and Take Two

Can any of the company-specific risk be diversified away by investing in both Bell Food and Take Two 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 Bell Food and Take Two into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bell Food Group and Take Two Interactive Software, you can compare the effects of market volatilities on Bell Food and Take Two 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 Bell Food with a short position of Take Two. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bell Food and Take Two.

Diversification Opportunities for Bell Food and Take Two

-0.06

Correlation Coefficient

Bell Food  Take Two

Good diversification

The 3 months correlation between Bell and Take is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Bell Food Group and Take Two Interactive Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Take Two Interactive and Bell Food 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 Bell Food Group are associated (or correlated) with Take Two. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Take Two Interactive has no effect on the direction of Bell Food i.e., Bell Food and Take Two go up and down completely randomly.

Pair Corralation between Bell Food and Take Two

Assuming the 90 days trading horizon Bell Food is expected to generate 4.79 times less return on investment than Take Two. But when comparing it to its historical volatility, Bell Food Group is 1.56 times less risky than Take Two. It trades about 0.03 of its potential returns per unit of risk. Take Two Interactive Software is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  10,267  in Take Two Interactive Software on September 21, 2024 and sell it today you would earn a total of  8,133  from holding Take Two Interactive Software or generate 79.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.01%
Values	Daily Returns

Bell Food Group  vs.  Take Two Interactive Software

Bell Food Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bell Food Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Bell Food is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

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 comparatively uncertain basic indicators, Take Two unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bell Food and Take Two

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

The idea behind Bell Food Group and Take Two Interactive Software 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.