Correlation Between Take Two and Extra Space

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

Diversification Opportunities for Take Two and Extra Space

0.66

Correlation Coefficient

Take Two  Extra Space

Poor diversification

The 3 months correlation between Take and Extra is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Take Two Interactive Software and Extra Space Storage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Extra Space Storage 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 Extra Space. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Extra Space Storage has no effect on the direction of Take Two i.e., Take Two and Extra Space go up and down completely randomly.

Pair Corralation between Take Two and Extra Space

Assuming the 90 days trading horizon Take Two Interactive Software is expected to under-perform the Extra Space. But the stock apears to be less risky and, when comparing its historical volatility, Take Two Interactive Software is 1.24 times less risky than Extra Space. The stock trades about -0.09 of its potential returns per unit of risk. The Extra Space Storage is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  20,895  in Extra Space Storage on April 19, 2025 and sell it today you would lose (147.00) from holding Extra Space Storage or give up 0.7% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Take Two Interactive Software  vs.  Extra Space Storage

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 7 (%) 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.

Extra Space Storage

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Extra Space Storage are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Extra Space may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Take Two and Extra Space

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

The idea behind Take Two Interactive Software and Extra Space Storage 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..