Correlation Between Rush Street and International Game

Can any of the company-specific risk be diversified away by investing in both Rush Street 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 Rush Street and International Game into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Rush Street Interactive and International Game Technology, you can compare the effects of market volatilities on Rush Street 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 Rush Street with a short position of International Game. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rush Street and International Game.

Diversification Opportunities for Rush Street and International Game

-0.68

Correlation Coefficient

Rush Street  International Game

Excellent diversification

The 3 months correlation between Rush and International is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Rush Street Interactive and International Game Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Game and Rush Street 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 Rush Street Interactive 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 Rush Street i.e., Rush Street and International Game go up and down completely randomly.

Pair Corralation between Rush Street and International Game

Considering the 90-day investment horizon Rush Street Interactive is expected to under-perform the International Game. In addition to that, Rush Street is 1.36 times more volatile than International Game Technology. It trades about -0.16 of its total potential returns per unit of risk. International Game Technology is currently generating about -0.2 per unit of volatility. If you would invest  2,200  in International Game Technology on January 31, 2024 and sell it today you would lose (160.00) from holding International Game Technology or give up 7.27% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Rush Street Interactive  vs.  International Game Technology

Rush Street Interactive

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Rush Street Interactive are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, Rush Street demonstrated solid returns over the last few months and may actually be approaching a breakup point.

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 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 May 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Rush Street and International Game

The main advantage of trading using opposite Rush Street and International Game positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rush Street 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.

The idea behind Rush Street Interactive and International Game Technology 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.