Correlation Between International Game and Prosus NV

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

Diversification Opportunities for International Game and Prosus NV

0.27

Correlation Coefficient

International Game  Prosus NV

Modest diversification

The 3 months correlation between International and Prosus is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding International Game Technology and Prosus NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prosus NV 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 Prosus NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prosus NV has no effect on the direction of International Game i.e., International Game and Prosus NV go up and down completely randomly.

Pair Corralation between International Game and Prosus NV

Assuming the 90 days horizon International Game is expected to generate 18.75 times less return on investment than Prosus NV. But when comparing it to its historical volatility, International Game Technology is 1.72 times less risky than Prosus NV. It trades about 0.01 of its potential returns per unit of risk. Prosus NV is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  3,806  in Prosus NV on December 2, 2024 and sell it today you would earn a total of  371.00  from holding Prosus NV or generate 9.75% return on investment over 90 days.

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

International Game Technology  vs.  Prosus NV

International Game

Risk-Adjusted Performance

Very Weak

Over the last 90 days International Game Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Prosus NV

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Prosus NV are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Prosus NV may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with International Game and Prosus NV

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

The idea behind International Game Technology and Prosus NV 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.