Correlation Between International Game and Media

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

Diversification Opportunities for International Game and Media

-0.25

Correlation Coefficient

International Game  Media

Very good diversification

The 3 months correlation between International and Media is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding International Game Technology and Media and Games in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Media and Games 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 Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Media and Games has no effect on the direction of International Game i.e., International Game and Media go up and down completely randomly.

Pair Corralation between International Game and Media

Assuming the 90 days horizon International Game Technology is expected to under-perform the Media. But the stock apears to be less risky and, when comparing its historical volatility, International Game Technology is 1.86 times less risky than Media. The stock trades about -0.06 of its potential returns per unit of risk. The Media and Games is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  305.00  in Media and Games on August 31, 2024 and sell it today you would earn a total of  47.00  from holding Media and Games or generate 15.41% return on investment over 90 days.

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

International Game Technology  vs.  Media and Games

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 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.

Media and Games

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Media and Games are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile technical and fundamental indicators, Media unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with International Game and Media

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

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