Correlation Between Take-Two Interactive and Toyota

Can any of the company-specific risk be diversified away by investing in both Take-Two Interactive and Toyota 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 Interactive and Toyota 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 Toyota Motor, you can compare the effects of market volatilities on Take-Two Interactive and Toyota 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 Interactive with a short position of Toyota. Check out your portfolio center. Please also check ongoing floating volatility patterns of Take-Two Interactive and Toyota.

Diversification Opportunities for Take-Two Interactive and Toyota

-0.35

Correlation Coefficient

Take-Two Interactive  Toyota

Very good diversification

The 3 months correlation between Take-Two and Toyota is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Take Two Interactive Software and Toyota Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Toyota Motor and Take-Two Interactive 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 Toyota. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Toyota Motor has no effect on the direction of Take-Two Interactive i.e., Take-Two Interactive and Toyota go up and down completely randomly.

Pair Corralation between Take-Two Interactive and Toyota

Assuming the 90 days horizon Take-Two Interactive is expected to generate 2.38 times less return on investment than Toyota. But when comparing it to its historical volatility, Take Two Interactive Software is 1.61 times less risky than Toyota. It trades about 0.01 of its potential returns per unit of risk. Toyota Motor is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,620  in Toyota Motor on April 24, 2025 and sell it today you would earn a total of  4.00  from holding Toyota Motor or generate 0.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Take Two Interactive Software  vs.  Toyota Motor

Take Two Interactive

Risk-Adjusted Performance

Very Weak

Over the last 90 days Take Two Interactive Software has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Take-Two Interactive is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Toyota Motor

Risk-Adjusted Performance

Very Weak

Over the last 90 days Toyota Motor has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Toyota is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Take-Two Interactive and Toyota

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

The idea behind Take Two Interactive Software and Toyota Motor 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.