Correlation Between Take Two and Vodafone Group

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

Diversification Opportunities for Take Two and Vodafone Group

-0.2

Correlation Coefficient

Take Two  Vodafone Group

Good diversification

The 3 months correlation between Take and Vodafone is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Take Two Interactive Software and Vodafone Group Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vodafone Group Public 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 Vodafone Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vodafone Group Public has no effect on the direction of Take Two i.e., Take Two and Vodafone Group go up and down completely randomly.

Pair Corralation between Take Two and Vodafone Group

Assuming the 90 days trading horizon Take Two Interactive Software is expected to generate 0.93 times more return on investment than Vodafone Group. However, Take Two Interactive Software is 1.07 times less risky than Vodafone Group. It trades about 0.3 of its potential returns per unit of risk. Vodafone Group Public is currently generating about -0.04 per unit of risk. If you would invest  21,063  in Take Two Interactive Software on September 14, 2024 and sell it today you would earn a total of  7,385  from holding Take Two Interactive Software or generate 35.06% 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.  Vodafone Group Public

Take Two Interactive

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Take Two Interactive Software are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Take Two sustained solid returns over the last few months and may actually be approaching a breakup point.

Vodafone Group Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vodafone Group Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Vodafone Group 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 Vodafone Group

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

The idea behind Take Two Interactive Software and Vodafone Group Public 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.