Correlation Between International Game and Hilton Grand

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

Diversification Opportunities for International Game and Hilton Grand

0.21

Correlation Coefficient

International Game  Hilton Grand

Modest diversification

The 3 months correlation between International and Hilton is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding International Game Technology and Hilton Grand Vacations in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hilton Grand Vacations 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 Hilton Grand. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hilton Grand Vacations has no effect on the direction of International Game i.e., International Game and Hilton Grand go up and down completely randomly.

Pair Corralation between International Game and Hilton Grand

Considering the 90-day investment horizon International Game Technology is expected to under-perform the Hilton Grand. But the stock apears to be less risky and, when comparing its historical volatility, International Game Technology is 1.53 times less risky than Hilton Grand. The stock trades about -0.05 of its potential returns per unit of risk. The Hilton Grand Vacations is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  3,907  in Hilton Grand Vacations on December 30, 2024 and sell it today you would lose (170.00) from holding Hilton Grand Vacations or give up 4.35% of portfolio value over 90 days.

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

International Game Technology  vs.  Hilton Grand Vacations

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 comparatively stable technical and fundamental indicators, International Game is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Hilton Grand Vacations

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hilton Grand Vacations has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable technical and fundamental indicators, Hilton Grand is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with International Game and Hilton Grand

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

The idea behind International Game Technology and Hilton Grand Vacations 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.