Correlation Between International Game and Vale SA

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

Diversification Opportunities for International Game and Vale SA

0.52

Correlation Coefficient

International Game  Vale SA

Very weak diversification

The 3 months correlation between International and Vale is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding International Game Technology and Vale SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vale SA 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 Vale SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vale SA has no effect on the direction of International Game i.e., International Game and Vale SA go up and down completely randomly.

Pair Corralation between International Game and Vale SA

Assuming the 90 days horizon International Game Technology is expected to under-perform the Vale SA. In addition to that, International Game is 1.16 times more volatile than Vale SA. It trades about -0.11 of its total potential returns per unit of risk. Vale SA is currently generating about -0.13 per unit of volatility. If you would invest  1,030  in Vale SA on October 4, 2024 and sell it today you would lose (135.00) from holding Vale SA or give up 13.11% of portfolio value over 90 days.

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

International Game Technology  vs.  Vale SA

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 fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Vale SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vale SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's essential indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with International Game and Vale SA

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

The idea behind International Game Technology and Vale SA 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.