Correlation Between International Game and GameStop Corp
Can any of the company-specific risk be diversified away by investing in both International Game and GameStop Corp 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 International Game and GameStop Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Game Technology and GameStop Corp, you can compare the effects of market volatilities on International Game and GameStop Corp 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 International Game with a short position of GameStop Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Game and GameStop Corp.
Diversification Opportunities for International Game and GameStop Corp
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between International and GameStop is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding International Game Technology and GameStop Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GameStop Corp and International Game 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 International Game Technology are associated (or correlated) with GameStop Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GameStop Corp has no effect on the direction of International Game i.e., International Game and GameStop Corp go up and down completely randomly.
Pair Corralation between International Game and GameStop Corp
Considering the 90-day investment horizon International Game Technology is expected to generate 0.59 times more return on investment than GameStop Corp. However, International Game Technology is 1.7 times less risky than GameStop Corp. It trades about 0.02 of its potential returns per unit of risk. GameStop Corp is currently generating about -0.02 per unit of risk. If you would invest 1,854 in International Game Technology on January 25, 2024 and sell it today you would earn a total of 200.00 from holding International Game Technology or generate 10.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Game Technology vs. GameStop Corp
Performance |
| Timeline |
| International Game |
| GameStop Corp |
International Game and GameStop Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Game and GameStop Corp
The main advantage of trading using opposite International Game and GameStop Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Game position performs unexpectedly, GameStop Corp 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 GameStop Corp will offset losses from the drop in GameStop Corp's long position.| International Game vs. PlayAGS | International Game vs. Inspired Entertainment | International Game vs. Light Wonder |
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Check out your portfolio center.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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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