Correlation Between International Game and Papa Johns

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

Diversification Opportunities for International Game and Papa Johns

0.04

Correlation Coefficient

International Game  Papa Johns

Significant diversification

The 3 months correlation between International and Papa is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding International Game Technology and Papa Johns International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Papa Johns International 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 Papa Johns. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Papa Johns International has no effect on the direction of International Game i.e., International Game and Papa Johns go up and down completely randomly.

Pair Corralation between International Game and Papa Johns

Considering the 90-day investment horizon International Game Technology is expected to under-perform the Papa Johns. But the stock apears to be less risky and, when comparing its historical volatility, International Game Technology is 1.9 times less risky than Papa Johns. The stock trades about -0.13 of its potential returns per unit of risk. The Papa Johns International is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  4,730  in Papa Johns International on September 3, 2024 and sell it today you would earn a total of  253.00  from holding Papa Johns International or generate 5.35% return on investment over 90 days.

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

International Game Technology  vs.  Papa Johns International

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 latest conflicting 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.

Papa Johns International

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Papa Johns International are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Papa Johns may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with International Game and Papa Johns

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

The idea behind International Game Technology and Papa Johns International 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.