Correlation Between Ark Restaurants and International Game
Can any of the company-specific risk be diversified away by investing in both Ark Restaurants and International Game 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 Ark Restaurants and International Game into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ark Restaurants Corp and International Game Technology, you can compare the effects of market volatilities on Ark Restaurants and International Game 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 Ark Restaurants with a short position of International Game. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ark Restaurants and International Game.
Diversification Opportunities for Ark Restaurants and International Game
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ark and International is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Ark Restaurants Corp and International Game Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Game and Ark Restaurants 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 Ark Restaurants Corp are associated (or correlated) with International Game. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Game has no effect on the direction of Ark Restaurants i.e., Ark Restaurants and International Game go up and down completely randomly.
Pair Corralation between Ark Restaurants and International Game
Given the investment horizon of 90 days Ark Restaurants Corp is expected to under-perform the International Game. But the stock apears to be less risky and, when comparing its historical volatility, Ark Restaurants Corp is 1.03 times less risky than International Game. The stock trades about -0.41 of its potential returns per unit of risk. The International Game Technology is currently generating about -0.14 of returns per unit of risk over similar time horizon. If you would invest 2,052 in International Game Technology on August 24, 2024 and sell it today you would lose (125.00) from holding International Game Technology or give up 6.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ark Restaurants Corp vs. International Game Technology
Performance |
| Timeline |
| Ark Restaurants Corp |
| International Game |
Ark Restaurants and International Game Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ark Restaurants and International Game
The main advantage of trading using opposite Ark Restaurants and International Game positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ark Restaurants position performs unexpectedly, International Game 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 International Game will offset losses from the drop in International Game's long position.| Ark Restaurants vs. Chipotle Mexican Grill | Ark Restaurants vs. Eshallgo Class A | Ark Restaurants vs. Amtech Systems | Ark Restaurants vs. Gold Fields Ltd |
| International Game vs. Accel Entertainment | International Game vs. Light Wonder | International Game vs. Inspired Entertainment | International Game vs. PlayAGS |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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