Correlation Between Take Two and Advance Auto

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

Diversification Opportunities for Take Two and Advance Auto

0.39

Correlation Coefficient

Take Two  Advance Auto

Weak diversification

The 3 months correlation between Take and Advance is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Take Two Interactive Software and Advance Auto Parts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advance Auto Parts 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 Advance Auto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advance Auto Parts has no effect on the direction of Take Two i.e., Take Two and Advance Auto go up and down completely randomly.

Pair Corralation between Take Two and Advance Auto

Assuming the 90 days trading horizon Take Two is expected to generate 10.15 times less return on investment than Advance Auto. But when comparing it to its historical volatility, Take Two Interactive Software is 4.54 times less risky than Advance Auto. It trades about 0.07 of its potential returns per unit of risk. Advance Auto Parts is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  1,162  in Advance Auto Parts on April 20, 2025 and sell it today you would earn a total of  954.00  from holding Advance Auto Parts or generate 82.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Take Two Interactive Software  vs.  Advance Auto Parts

Take Two Interactive

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Take Two Interactive Software are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Take Two may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Advance Auto Parts

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Advance Auto Parts are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Advance Auto sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Take Two and Advance Auto

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

The idea behind Take Two Interactive Software and Advance Auto Parts 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.