Correlation Between International Game and Apple

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

Diversification Opportunities for International Game and Apple

-0.42

Correlation Coefficient

International Game  Apple

Very good diversification

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

Pair Corralation between International Game and Apple

Assuming the 90 days horizon International Game Technology is expected to under-perform the Apple. In addition to that, International Game is 1.51 times more volatile than Apple Inc. It trades about -0.04 of its total potential returns per unit of risk. Apple Inc is currently generating about 0.2 per unit of volatility. If you would invest  20,161  in Apple Inc on September 13, 2024 and sell it today you would earn a total of  3,489  from holding Apple Inc or generate 17.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

International Game Technology  vs.  Apple Inc

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. Despite nearly stable basic indicators, International Game is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Apple Inc

Risk-Adjusted Performance

15 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile fundamental indicators, Apple unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with International Game and Apple

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

The idea behind International Game Technology and Apple Inc 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.