Correlation Between International Games and Trk Corp
Can any of the company-specific risk be diversified away by investing in both International Games and Trk Corp 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 Games and Trk Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Games System and Trk Corp, you can compare the effects of market volatilities on International Games and Trk Corp 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 Games with a short position of Trk Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Games and Trk Corp.
Diversification Opportunities for International Games and Trk Corp
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between International and Trk is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding International Games System and Trk Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trk Corp and International Games 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 Games System are associated (or correlated) with Trk Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trk Corp has no effect on the direction of International Games i.e., International Games and Trk Corp go up and down completely randomly.
Pair Corralation between International Games and Trk Corp
Assuming the 90 days trading horizon International Games System is expected to under-perform the Trk Corp. But the stock apears to be less risky and, when comparing its historical volatility, International Games System is 1.23 times less risky than Trk Corp. The stock trades about -0.23 of its potential returns per unit of risk. The Trk Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,955 in Trk Corp on August 29, 2024 and sell it today you would earn a total of 45.00 from holding Trk Corp or generate 2.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Games System vs. Trk Corp
Performance |
| Timeline |
| International Games |
| Trk Corp |
International Games and Trk Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Games and Trk Corp
The main advantage of trading using opposite International Games and Trk Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Games position performs unexpectedly, Trk Corp 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 Trk Corp will offset losses from the drop in Trk Corp's long position.| International Games vs. Sinopac Financial Holdings | International Games vs. Fubon Financial Holding | International Games vs. Chi Hua Fitness | International Games vs. Phytohealth Corp |
| Trk Corp vs. Tainan Spinning Co | Trk Corp vs. Carnival Industrial Corp | Trk Corp vs. Symtek Automation Asia | Trk Corp vs. CTCI Corp |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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