Correlation Between Good Times and International Game

Can any of the company-specific risk be diversified away by investing in both Good Times and International Game 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 Good Times and International Game into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Good Times Restaurants and International Game Technology, you can compare the effects of market volatilities on Good Times and International Game 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 Good Times with a short position of International Game. Check out your portfolio center. Please also check ongoing floating volatility patterns of Good Times and International Game.

Diversification Opportunities for Good Times and International Game

0.79

Correlation Coefficient

Good Times  International Game

Poor diversification

The 3 months correlation between Good and International is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Good Times Restaurants and International Game Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Game and Good Times 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 Good Times Restaurants are associated (or correlated) with International Game. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Game has no effect on the direction of Good Times i.e., Good Times and International Game go up and down completely randomly.

Pair Corralation between Good Times and International Game

Given the investment horizon of 90 days Good Times Restaurants is expected to generate 1.15 times more return on investment than International Game. However, Good Times is 1.15 times more volatile than International Game Technology. It trades about 0.01 of its potential returns per unit of risk. International Game Technology is currently generating about -0.05 per unit of risk. If you would invest  253.00  in Good Times Restaurants on December 4, 2024 and sell it today you would lose (10.00) from holding Good Times Restaurants or give up 3.95% of portfolio value over 90 days.

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

Good Times Restaurants  vs.  International Game Technology

Good Times Restaurants

Risk-Adjusted Performance

Very Weak

Over the last 90 days Good Times Restaurants has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's forward indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

International Game

Risk-Adjusted Performance

Very Weak

Over the last 90 days International Game Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Good Times and International Game

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

The idea behind Good Times Restaurants and International Game Technology 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.