Correlation Between AFC Gamma and Gaming Leisure

Can any of the company-specific risk be diversified away by investing in both AFC Gamma and Gaming Leisure 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 AFC Gamma and Gaming Leisure into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AFC Gamma and Gaming Leisure Properties, you can compare the effects of market volatilities on AFC Gamma and Gaming Leisure 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 AFC Gamma with a short position of Gaming Leisure. Check out your portfolio center. Please also check ongoing floating volatility patterns of AFC Gamma and Gaming Leisure.

Diversification Opportunities for AFC Gamma and Gaming Leisure

0.64

Correlation Coefficient

AFC Gamma  Gaming Leisure

Poor diversification

The 3 months correlation between AFC and Gaming is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding AFC Gamma and Gaming Leisure Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gaming Leisure Properties and AFC Gamma 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 AFC Gamma are associated (or correlated) with Gaming Leisure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gaming Leisure Properties has no effect on the direction of AFC Gamma i.e., AFC Gamma and Gaming Leisure go up and down completely randomly.

Pair Corralation between AFC Gamma and Gaming Leisure

Given the investment horizon of 90 days AFC Gamma is expected to under-perform the Gaming Leisure. In addition to that, AFC Gamma is 1.65 times more volatile than Gaming Leisure Properties. It trades about -0.08 of its total potential returns per unit of risk. Gaming Leisure Properties is currently generating about -0.07 per unit of volatility. If you would invest  5,025  in Gaming Leisure Properties on October 7, 2024 and sell it today you would lose (239.00) from holding Gaming Leisure Properties or give up 4.76% of portfolio value over 90 days.

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

AFC Gamma  vs.  Gaming Leisure Properties

AFC Gamma

Risk-Adjusted Performance

0 of 100

Very Weak

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

Gaming Leisure Properties

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gaming Leisure Properties has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Gaming Leisure is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with AFC Gamma and Gaming Leisure

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

The idea behind AFC Gamma and Gaming Leisure Properties 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.