Correlation Between Take Two and Edinburgh Investment

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

Diversification Opportunities for Take Two and Edinburgh Investment

0.71

Correlation Coefficient

Take Two  Edinburgh Investment

Poor diversification

The 3 months correlation between Take and Edinburgh is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Take Two Interactive Software and Edinburgh Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edinburgh Investment 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 Edinburgh Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edinburgh Investment has no effect on the direction of Take Two i.e., Take Two and Edinburgh Investment go up and down completely randomly.

Pair Corralation between Take Two and Edinburgh Investment

Assuming the 90 days trading horizon Take Two Interactive Software is expected to generate 3.3 times more return on investment than Edinburgh Investment. However, Take Two is 3.3 times more volatile than Edinburgh Investment Trust. It trades about 0.09 of its potential returns per unit of risk. Edinburgh Investment Trust is currently generating about 0.25 per unit of risk. If you would invest  21,433  in Take Two Interactive Software on April 23, 2025 and sell it today you would earn a total of  1,785  from holding Take Two Interactive Software or generate 8.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Take Two Interactive Software  vs.  Edinburgh Investment Trust

Take Two Interactive

Risk-Adjusted Performance

OK

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

Edinburgh Investment

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Edinburgh Investment Trust are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Edinburgh Investment may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Take Two and Edinburgh Investment

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

The idea behind Take Two Interactive Software and Edinburgh Investment Trust 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.