Can any of the company-specific risk be diversified away by investing in both International Game and PointsBet Holdings 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 PointsBet Holdings 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 PointsBet Holdings Limited, you can compare the effects of market volatilities on International Game and PointsBet Holdings 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 PointsBet Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Game and PointsBet Holdings.
Diversification Opportunities for International Game and PointsBet Holdings
The 3 months correlation between International and PointsBet is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding International Game Technology and PointsBet Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PointsBet Holdings 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 PointsBet Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PointsBet Holdings has no effect on the direction of International Game i.e., International Game and PointsBet Holdings go up and down completely randomly.
Pair Corralation between International Game and PointsBet Holdings
Considering the 90-day investment horizon International Game is expected to generate 16.77 times less return on investment than PointsBet Holdings. But when comparing it to its historical volatility, International Game Technology is 5.34 times less risky than PointsBet Holdings. It trades about 0.06 of its potential returns per unit of risk. PointsBet Holdings Limited is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 28.00 in PointsBet Holdings Limited on March 6, 2024 and sell it today you would earn a total of 6.00 from holding PointsBet Holdings Limited or generate 21.43% return on investment over 90 days.
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 uncertain performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in July 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.
Over the last 90 days PointsBet Holdings Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical indicators remain nearly stable which may send shares a bit higher in July 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.