Correlation Between Hilton Worldwide and International Game

Can any of the company-specific risk be diversified away by investing in both Hilton Worldwide and International Game 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 Hilton Worldwide and International Game into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hilton Worldwide Holdings and International Game Technology, you can compare the effects of market volatilities on Hilton Worldwide and International Game 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 Hilton Worldwide with a short position of International Game. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hilton Worldwide and International Game.

Diversification Opportunities for Hilton Worldwide and International Game

-0.42

Correlation Coefficient

Hilton Worldwide  International Game

Very good diversification

The 3 months correlation between Hilton and International is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Hilton Worldwide Holdings and International Game Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Game and Hilton Worldwide 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 Hilton Worldwide Holdings are associated (or correlated) with International Game. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Game has no effect on the direction of Hilton Worldwide i.e., Hilton Worldwide and International Game go up and down completely randomly.

Pair Corralation between Hilton Worldwide and International Game

Considering the 90-day investment horizon Hilton Worldwide Holdings is expected to under-perform the International Game. But the stock apears to be less risky and, when comparing its historical volatility, Hilton Worldwide Holdings is 1.17 times less risky than International Game. The stock trades about -0.23 of its potential returns per unit of risk. The International Game Technology is currently generating about -0.16 of returns per unit of risk over similar time horizon. If you would invest  2,125  in International Game Technology on February 5, 2024 and sell it today you would lose (120.00) from holding International Game Technology or give up 5.65% of portfolio value over 90 days.

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

Hilton Worldwide Holdings  vs.  International Game Technology

Hilton Worldwide Holdings

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hilton Worldwide Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable essential indicators, Hilton Worldwide is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

International Game

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days International Game Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in June 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Hilton Worldwide and International Game

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

The idea behind Hilton Worldwide Holdings and International Game Technology 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.

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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.