Correlation Between International Games and MacroWell OMG

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

By analyzing existing cross correlation between International Games System and MacroWell OMG Digital, you can compare the effects of market volatilities on International Games and MacroWell OMG 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 Games with a short position of MacroWell OMG. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Games and MacroWell OMG.

Diversification Opportunities for International Games and MacroWell OMG

0.61

Correlation Coefficient

International Games  MacroWell OMG

Poor diversification

The 3 months correlation between International and MacroWell is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding International Games System and MacroWell OMG Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MacroWell OMG Digital and International Games 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 Games System are associated (or correlated) with MacroWell OMG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MacroWell OMG Digital has no effect on the direction of International Games i.e., International Games and MacroWell OMG go up and down completely randomly.

Pair Corralation between International Games and MacroWell OMG

Assuming the 90 days trading horizon International Games System is expected to generate 1.13 times more return on investment than MacroWell OMG. However, International Games is 1.13 times more volatile than MacroWell OMG Digital. It trades about -0.18 of its potential returns per unit of risk. MacroWell OMG Digital is currently generating about -0.33 per unit of risk. If you would invest  103,500  in International Games System on October 8, 2024 and sell it today you would lose (5,400) from holding International Games System or give up 5.22% of portfolio value over 90 days.

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

International Games System  vs.  MacroWell OMG Digital

International Games

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in International Games System are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, International Games is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

MacroWell OMG Digital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MacroWell OMG Digital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, MacroWell OMG is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with International Games and MacroWell OMG

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

The idea behind International Games System and MacroWell OMG Digital 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.