Correlation Between International Game and BuzzFeed

Can any of the company-specific risk be diversified away by investing in both International Game and BuzzFeed 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 BuzzFeed 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 BuzzFeed, you can compare the effects of market volatilities on International Game and BuzzFeed 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 BuzzFeed. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Game and BuzzFeed.

Diversification Opportunities for International Game and BuzzFeed

0.18

Correlation Coefficient

International Game  BuzzFeed

Average diversification

The 3 months correlation between International and BuzzFeed is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding International Game Technology and BuzzFeed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BuzzFeed 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 BuzzFeed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BuzzFeed has no effect on the direction of International Game i.e., International Game and BuzzFeed go up and down completely randomly.

Pair Corralation between International Game and BuzzFeed

Considering the 90-day investment horizon International Game Technology is expected to under-perform the BuzzFeed. But the stock apears to be less risky and, when comparing its historical volatility, International Game Technology is 12.77 times less risky than BuzzFeed. The stock trades about -0.19 of its potential returns per unit of risk. The BuzzFeed is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  4.48  in BuzzFeed on February 27, 2024 and sell it today you would earn a total of  6.52  from holding BuzzFeed or generate 145.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	92.86%
Values	Daily Returns

International Game Technology  vs.  BuzzFeed

International Game

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days International Game Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in June 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

BuzzFeed

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BuzzFeed are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental indicators, BuzzFeed showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with International Game and BuzzFeed

The main advantage of trading using opposite International Game and BuzzFeed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Game position performs unexpectedly, BuzzFeed 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 BuzzFeed will offset losses from the drop in BuzzFeed's long position.

The idea behind International Game Technology and BuzzFeed pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.