Correlation Between TESCO PLC and International Game

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

By analyzing existing cross correlation between TESCO PLC ADR1 and International Game Technology, you can compare the effects of market volatilities on TESCO PLC 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 TESCO PLC with a short position of International Game. Check out your portfolio center. Please also check ongoing floating volatility patterns of TESCO PLC and International Game.

Diversification Opportunities for TESCO PLC and International Game

-0.44

Correlation Coefficient

TESCO PLC  International Game

Very good diversification

The 3 months correlation between TESCO and International is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding TESCO PLC ADR1 and International Game Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Game and TESCO PLC 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 TESCO PLC ADR1 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 TESCO PLC i.e., TESCO PLC and International Game go up and down completely randomly.

Pair Corralation between TESCO PLC and International Game

Assuming the 90 days trading horizon TESCO PLC is expected to generate 4.59 times less return on investment than International Game. In addition to that, TESCO PLC is 1.55 times more volatile than International Game Technology. It trades about 0.03 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  1,270  in International Game Technology on April 8, 2025 and sell it today you would earn a total of  60.00  from holding International Game Technology or generate 4.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

TESCO PLC ADR1  vs.  International Game Technology

TESCO PLC ADR1

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TESCO PLC ADR1 are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, TESCO PLC reported solid returns over the last few months and may actually be approaching a breakup point.

International Game

Risk-Adjusted Performance

Weak

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

Pair Trading with TESCO PLC and International Game

The main advantage of trading using opposite TESCO PLC and International Game positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TESCO PLC 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 TESCO PLC ADR1 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.