Correlation Between International Game and Playtech PLC

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

Diversification Opportunities for International Game and Playtech PLC

0.68

Correlation Coefficient

International Game  Playtech PLC

Poor diversification

The 3 months correlation between International and Playtech is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding International Game Technology and Playtech PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Playtech PLC ADR 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 Playtech PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Playtech PLC ADR has no effect on the direction of International Game i.e., International Game and Playtech PLC go up and down completely randomly.

Pair Corralation between International Game and Playtech PLC

Considering the 90-day investment horizon International Game Technology is expected to under-perform the Playtech PLC. In addition to that, International Game is 3.82 times more volatile than Playtech PLC ADR. It trades about -0.32 of its total potential returns per unit of risk. Playtech PLC ADR is currently generating about 0.22 per unit of volatility. If you would invest  1,679  in Playtech PLC ADR on October 9, 2024 and sell it today you would earn a total of  32.00  from holding Playtech PLC ADR or generate 1.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.0%
Values	Daily Returns

International Game Technology  vs.  Playtech PLC ADR

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. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Playtech PLC ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Playtech PLC ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with International Game and Playtech PLC

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

The idea behind International Game Technology and Playtech PLC ADR 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.