Correlation Between American Express and Boyd Gaming

Can any of the company-specific risk be diversified away by investing in both American Express and Boyd Gaming 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 American Express and Boyd Gaming into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between American Express and Boyd Gaming, you can compare the effects of market volatilities on American Express and Boyd Gaming 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 American Express with a short position of Boyd Gaming. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and Boyd Gaming.

Diversification Opportunities for American Express and Boyd Gaming

0.56

Correlation Coefficient

American Express  Boyd Gaming

Very weak diversification

The 3 months correlation between American and Boyd is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Boyd Gaming in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boyd Gaming and American Express 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 American Express are associated (or correlated) with Boyd Gaming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boyd Gaming has no effect on the direction of American Express i.e., American Express and Boyd Gaming go up and down completely randomly.

Pair Corralation between American Express and Boyd Gaming

Assuming the 90 days trading horizon American Express is expected to generate 4.84 times less return on investment than Boyd Gaming. In addition to that, American Express is 1.05 times more volatile than Boyd Gaming. It trades about 0.01 of its total potential returns per unit of risk. Boyd Gaming is currently generating about 0.03 per unit of volatility. If you would invest  7,083  in Boyd Gaming on December 2, 2024 and sell it today you would earn a total of  167.00  from holding Boyd Gaming or generate 2.36% return on investment over 90 days.

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

American Express  vs.  Boyd Gaming

American Express

Risk-Adjusted Performance

Very Weak

Over the last 90 days American Express has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, American Express is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Boyd Gaming

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Boyd Gaming are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Boyd Gaming is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with American Express and Boyd Gaming

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

The idea behind American Express and Boyd Gaming 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.