Correlation Between INFORMATION SVC and Scientific Games

Can any of the company-specific risk be diversified away by investing in both INFORMATION SVC and Scientific Games 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 INFORMATION SVC and Scientific Games into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between INFORMATION SVC GRP and Scientific Games, you can compare the effects of market volatilities on INFORMATION SVC and Scientific Games 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 INFORMATION SVC with a short position of Scientific Games. Check out your portfolio center. Please also check ongoing floating volatility patterns of INFORMATION SVC and Scientific Games.

Diversification Opportunities for INFORMATION SVC and Scientific Games

0.37

Correlation Coefficient

INFORMATION SVC  Scientific Games

Weak diversification

The 3 months correlation between INFORMATION and Scientific is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding INFORMATION SVC GRP and Scientific Games in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scientific Games and INFORMATION SVC 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 INFORMATION SVC GRP are associated (or correlated) with Scientific Games. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scientific Games has no effect on the direction of INFORMATION SVC i.e., INFORMATION SVC and Scientific Games go up and down completely randomly.

Pair Corralation between INFORMATION SVC and Scientific Games

Assuming the 90 days horizon INFORMATION SVC GRP is expected to under-perform the Scientific Games. In addition to that, INFORMATION SVC is 1.04 times more volatile than Scientific Games. It trades about 0.0 of its total potential returns per unit of risk. Scientific Games is currently generating about 0.05 per unit of volatility. If you would invest  5,450  in Scientific Games on September 24, 2024 and sell it today you would earn a total of  2,750  from holding Scientific Games or generate 50.46% return on investment over 90 days.

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

INFORMATION SVC GRP  vs.  Scientific Games

INFORMATION SVC GRP

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in INFORMATION SVC GRP are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, INFORMATION SVC reported solid returns over the last few months and may actually be approaching a breakup point.

Scientific Games

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Scientific Games has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Scientific Games is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with INFORMATION SVC and Scientific Games

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

The idea behind INFORMATION SVC GRP and Scientific Games 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.