Correlation Between International Games and Dow Jones
Can any of the company-specific risk be diversified away by investing in both International Games and Dow Jones 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 Dow Jones 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 Dow Jones Industrial, you can compare the effects of market volatilities on International Games and Dow Jones 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 Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Games and Dow Jones.
Diversification Opportunities for International Games and Dow Jones
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between International and Dow is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding International Games System and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial 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 Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of International Games i.e., International Games and Dow Jones go up and down completely randomly.
Pair Corralation between International Games and Dow Jones
Assuming the 90 days trading horizon International Games System is expected to generate 3.62 times more return on investment than Dow Jones. However, International Games is 3.62 times more volatile than Dow Jones Industrial. It trades about 0.15 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.2 per unit of risk. If you would invest 76,600 in International Games System on September 3, 2024 and sell it today you would earn a total of 19,400 from holding International Games System or generate 25.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.44% |
| Values | Daily Returns |
International Games System vs. Dow Jones Industrial
Performance |
| Timeline |
International Games and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
International Games System
Pair trading matchups for International Games
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with International Games and Dow Jones
The main advantage of trading using opposite International Games and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Games position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| International Games vs. Soft World International | International Games vs. Softstar Entertainment | International Games vs. Chinese Gamer International | International Games vs. Userjoy Technology Co |
| Dow Jones vs. Eastern Co | Dow Jones vs. Uber Technologies | Dow Jones vs. AKITA Drilling | Dow Jones vs. Chemours Co |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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