Correlation Between International Game and Penske Automotive
Can any of the company-specific risk be diversified away by investing in both International Game and Penske Automotive 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 Penske Automotive 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 Penske Automotive Group, you can compare the effects of market volatilities on International Game and Penske Automotive 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 Penske Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Game and Penske Automotive.
Diversification Opportunities for International Game and Penske Automotive
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between International and Penske is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding International Game Technology and Penske Automotive Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Penske Automotive 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 Penske Automotive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Penske Automotive has no effect on the direction of International Game i.e., International Game and Penske Automotive go up and down completely randomly.
Pair Corralation between International Game and Penske Automotive
Assuming the 90 days horizon International Game Technology is expected to under-perform the Penske Automotive. In addition to that, International Game is 1.56 times more volatile than Penske Automotive Group. It trades about -0.17 of its total potential returns per unit of risk. Penske Automotive Group is currently generating about -0.16 per unit of volatility. If you would invest 15,400 in Penske Automotive Group on October 12, 2024 and sell it today you would lose (600.00) from holding Penske Automotive Group or give up 3.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.44% |
| Values | Daily Returns |
International Game Technology vs. Penske Automotive Group
Performance |
| Timeline |
| International Game |
| Penske Automotive |
International Game and Penske Automotive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Game and Penske Automotive
The main advantage of trading using opposite International Game and Penske Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Game position performs unexpectedly, Penske Automotive 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 Penske Automotive will offset losses from the drop in Penske Automotive's long position.| International Game vs. LANDSEA GREEN MANAGEMENT | International Game vs. CEOTRONICS | International Game vs. MAVEN WIRELESS SWEDEN | International Game vs. CeoTronics AG |
| Penske Automotive vs. CONTAGIOUS GAMING INC | Penske Automotive vs. HOCHSCHILD MINING | Penske Automotive vs. QINGCI GAMES INC | Penske Automotive vs. International Game Technology |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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