Correlation Between International Game and Neogames

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

Diversification Opportunities for International Game and Neogames

-0.65
  Correlation Coefficient

Excellent diversification

The 3 months correlation between International and Neogames is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding International Game Technology and Neogames SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neogames SA 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 Neogames. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neogames SA has no effect on the direction of International Game i.e., International Game and Neogames go up and down completely randomly.

Pair Corralation between International Game and Neogames

If you would invest  1,941  in International Game Technology on March 24, 2024 and sell it today you would earn a total of  101.00  from holding International Game Technology or generate 5.2% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy5.0%
ValuesDaily Returns

International Game Technology  vs.  Neogames SA

 Performance 
       Timeline  
International Game 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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 comparatively stable technical and fundamental indicators, International Game is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.
Neogames SA 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Neogames SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable primary indicators, Neogames is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

International Game and Neogames Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with International Game and Neogames

The main advantage of trading using opposite International Game and Neogames positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Game position performs unexpectedly, Neogames 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 Neogames will offset losses from the drop in Neogames' long position.
The idea behind International Game Technology and Neogames SA 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.

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