Correlation Between Fortune Brands and Take Two

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

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

Diversification Opportunities for Fortune Brands and Take Two

-0.57

Correlation Coefficient

Fortune Brands  Take Two

Excellent diversification

The 3 months correlation between Fortune and Take is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Fortune Brands Home 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 Fortune Brands 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 Fortune Brands Home 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 Fortune Brands i.e., Fortune Brands and Take Two go up and down completely randomly.

Pair Corralation between Fortune Brands and Take Two

Assuming the 90 days trading horizon Fortune Brands is expected to generate 1.82 times less return on investment than Take Two. In addition to that, Fortune Brands is 2.13 times more volatile than Take Two Interactive Software. It trades about 0.01 of its total potential returns per unit of risk. Take Two Interactive Software is currently generating about 0.03 per unit of volatility. If you would invest  22,433  in Take Two Interactive Software on April 25, 2025 and sell it today you would earn a total of  493.00  from holding Take Two Interactive Software or generate 2.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	71.43%
Values	Daily Returns

Fortune Brands Home  vs.  Take Two Interactive Software

Fortune Brands Home

Risk-Adjusted Performance

Very Weak

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

Take Two Interactive

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Take Two Interactive Software are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Take Two is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Fortune Brands and Take Two

The main advantage of trading using opposite Fortune Brands and Take Two positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortune Brands 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 Fortune Brands Home 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.