Correlation Between Take Two and Nintendo

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

Diversification Opportunities for Take Two and Nintendo

0.5

Correlation Coefficient

Take Two  Nintendo

Very weak diversification

The 3 months correlation between Take and Nintendo is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Take Two Interactive Software and Nintendo Co ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nintendo Co ADR 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 Nintendo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nintendo Co ADR has no effect on the direction of Take Two i.e., Take Two and Nintendo go up and down completely randomly.

Pair Corralation between Take Two and Nintendo

Given the investment horizon of 90 days Take Two Interactive Software is expected to generate 0.63 times more return on investment than Nintendo. However, Take Two Interactive Software is 1.58 times less risky than Nintendo. It trades about -0.02 of its potential returns per unit of risk. Nintendo Co ADR is currently generating about -0.02 per unit of risk. If you would invest  22,532  in Take Two Interactive Software on May 5, 2025 and sell it today you would lose (474.00) from holding Take Two Interactive Software or give up 2.1% of portfolio value over 90 days.

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

Take Two Interactive Software  vs.  Nintendo Co ADR

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. In spite of very healthy basic indicators, Take Two is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Nintendo Co ADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nintendo Co ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Nintendo is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Take Two and Nintendo

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

The idea behind Take Two Interactive Software and Nintendo Co ADR 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.