Correlation Between International Game and American Electric
Can any of the company-specific risk be diversified away by investing in both International Game and American Electric 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 American Electric 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 American Electric Power, you can compare the effects of market volatilities on International Game and American Electric 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 American Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Game and American Electric.
Diversification Opportunities for International Game and American Electric
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between International and American is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding International Game Technology and American Electric Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Electric Power 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 American Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Electric Power has no effect on the direction of International Game i.e., International Game and American Electric go up and down completely randomly.
Pair Corralation between International Game and American Electric
Assuming the 90 days horizon International Game Technology is expected to generate 1.28 times more return on investment than American Electric. However, International Game is 1.28 times more volatile than American Electric Power. It trades about 0.13 of its potential returns per unit of risk. American Electric Power is currently generating about 0.11 per unit of risk. If you would invest 1,610 in International Game Technology on November 29, 2024 and sell it today you would earn a total of 90.00 from holding International Game Technology or generate 5.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Game Technology vs. American Electric Power
Performance |
| Timeline |
| International Game |
| American Electric Power |
International Game and American Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Game and American Electric
The main advantage of trading using opposite International Game and American Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Game position performs unexpectedly, American Electric 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 American Electric will offset losses from the drop in American Electric's long position.| International Game vs. SIERRA METALS | International Game vs. SHELF DRILLING LTD | International Game vs. Games Workshop Group | International Game vs. Jacquet Metal Service |
| American Electric vs. MOVIE GAMES SA | American Electric vs. InterContinental Hotels Group | American Electric vs. COVIVIO HOTELS INH | American Electric vs. Dalata Hotel Group |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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