Correlation Between Take Two and Fevertree Drinks

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

Diversification Opportunities for Take Two and Fevertree Drinks

0.74

Correlation Coefficient

Take Two  Fevertree Drinks

Poor diversification

The 3 months correlation between Take and Fevertree is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Take Two Interactive Software and Fevertree Drinks Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fevertree Drinks Plc 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 Fevertree Drinks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fevertree Drinks Plc has no effect on the direction of Take Two i.e., Take Two and Fevertree Drinks go up and down completely randomly.

Pair Corralation between Take Two and Fevertree Drinks

Assuming the 90 days trading horizon Take Two is expected to generate 1.98 times less return on investment than Fevertree Drinks. But when comparing it to its historical volatility, Take Two Interactive Software is 1.05 times less risky than Fevertree Drinks. It trades about 0.09 of its potential returns per unit of risk. Fevertree Drinks Plc is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  77,673  in Fevertree Drinks Plc on April 23, 2025 and sell it today you would earn a total of  13,727  from holding Fevertree Drinks Plc or generate 17.67% 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.  Fevertree Drinks Plc

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.

Fevertree Drinks Plc

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fevertree Drinks Plc are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Fevertree Drinks unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Take Two and Fevertree Drinks

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

The idea behind Take Two Interactive Software and Fevertree Drinks Plc 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.