Correlation Between Gaming Leisure and AFC Gamma

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

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

Diversification Opportunities for Gaming Leisure and AFC Gamma

0.82

Correlation Coefficient

Gaming Leisure  AFC Gamma

Very poor diversification

The 3 months correlation between Gaming and AFC is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Gaming Leisure Properties and AFC Gamma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AFC Gamma and Gaming Leisure 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 Gaming Leisure Properties are associated (or correlated) with AFC Gamma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AFC Gamma has no effect on the direction of Gaming Leisure i.e., Gaming Leisure and AFC Gamma go up and down completely randomly.

Pair Corralation between Gaming Leisure and AFC Gamma

Given the investment horizon of 90 days Gaming Leisure is expected to generate 5.27 times less return on investment than AFC Gamma. But when comparing it to its historical volatility, Gaming Leisure Properties is 1.77 times less risky than AFC Gamma. It trades about 0.01 of its potential returns per unit of risk. AFC Gamma is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  735.00  in AFC Gamma on October 22, 2024 and sell it today you would earn a total of  127.00  from holding AFC Gamma or generate 17.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.8%
Values	Daily Returns

Gaming Leisure Properties  vs.  AFC Gamma

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.

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.

Pair Trading with Gaming Leisure and AFC Gamma

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

The idea behind Gaming Leisure Properties and AFC Gamma 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.