Correlation Between International Game and Darden Restaurants
Can any of the company-specific risk be diversified away by investing in both International Game and Darden Restaurants 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 Darden Restaurants 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 Darden Restaurants, you can compare the effects of market volatilities on International Game and Darden Restaurants 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 Darden Restaurants. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Game and Darden Restaurants.
Diversification Opportunities for International Game and Darden Restaurants
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between International and Darden is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding International Game Technology and Darden Restaurants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Darden Restaurants 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 Darden Restaurants. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Darden Restaurants has no effect on the direction of International Game i.e., International Game and Darden Restaurants go up and down completely randomly.
Pair Corralation between International Game and Darden Restaurants
Assuming the 90 days horizon International Game Technology is expected to under-perform the Darden Restaurants. In addition to that, International Game is 1.67 times more volatile than Darden Restaurants. It trades about -0.01 of its total potential returns per unit of risk. Darden Restaurants is currently generating about 0.35 per unit of volatility. If you would invest 14,800 in Darden Restaurants on September 1, 2024 and sell it today you would earn a total of 1,735 from holding Darden Restaurants or generate 11.72% 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. Darden Restaurants
Performance |
| Timeline |
| International Game |
| Darden Restaurants |
International Game and Darden Restaurants Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Game and Darden Restaurants
The main advantage of trading using opposite International Game and Darden Restaurants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Game position performs unexpectedly, Darden Restaurants 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 Darden Restaurants will offset losses from the drop in Darden Restaurants' long position.| International Game vs. Nishi Nippon Railroad Co | International Game vs. Transport International Holdings | International Game vs. HEALTHCARE REAL A | International Game vs. Texas Roadhouse |
| Darden Restaurants vs. GFL ENVIRONM | Darden Restaurants vs. CosmoSteel Holdings Limited | Darden Restaurants vs. COSMOSTEEL HLDGS | Darden Restaurants vs. NORWEGIAN AIR SHUT |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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