Correlation Between La Française and International Game
Can any of the company-specific risk be diversified away by investing in both La Française 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 La Française and International Game into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between La Franaise des and International Game Technology, you can compare the effects of market volatilities on La Française 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 La Française with a short position of International Game. Check out your portfolio center. Please also check ongoing floating volatility patterns of La Française and International Game.
Diversification Opportunities for La Française and International Game
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between 1WE and International is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding La Franaise des and International Game Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Game and La Française 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 La Franaise des 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 La Française i.e., La Française and International Game go up and down completely randomly.
Pair Corralation between La Française and International Game
Assuming the 90 days horizon La Franaise des is expected to under-perform the International Game. But the stock apears to be less risky and, when comparing its historical volatility, La Franaise des is 1.66 times less risky than International Game. The stock trades about -0.28 of its potential returns per unit of risk. The International Game Technology is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 1,830 in International Game Technology on September 4, 2024 and sell it today you would lose (30.00) from holding International Game Technology or give up 1.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
La Franaise des vs. International Game Technology
Performance |
| Timeline |
| La Franaise des |
| International Game |
La Française and International Game Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with La Française and International Game
The main advantage of trading using opposite La Française and International Game positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if La Française 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.| La Française vs. Flutter Entertainment PLC | La Française vs. Evolution AB | La Française vs. Churchill Downs Incorporated | La Française vs. Churchill Downs Incorporated |
| International Game vs. Flutter Entertainment PLC | International Game vs. Evolution AB | International Game vs. Churchill Downs Incorporated | International Game vs. Churchill Downs Incorporated |
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.
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