Correlation Between Auburn National and Boyd Gaming

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

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

Diversification Opportunities for Auburn National and Boyd Gaming

-0.75

Correlation Coefficient

Auburn National  Boyd Gaming

Pay attention - limited upside

The 3 months correlation between Auburn and Boyd is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Auburn National Bancorp. and Boyd Gaming in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boyd Gaming and Auburn National 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 Auburn National Bancorporation 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 Auburn National i.e., Auburn National and Boyd Gaming go up and down completely randomly.

Pair Corralation between Auburn National and Boyd Gaming

Given the investment horizon of 90 days Auburn National Bancorporation is expected to under-perform the Boyd Gaming. In addition to that, Auburn National is 1.59 times more volatile than Boyd Gaming. It trades about -0.04 of its total potential returns per unit of risk. Boyd Gaming is currently generating about 0.01 per unit of volatility. If you would invest  7,384  in Boyd Gaming on December 3, 2024 and sell it today you would earn a total of  41.00  from holding Boyd Gaming or generate 0.56% return on investment over 90 days.

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

Auburn National Bancorp.  vs.  Boyd Gaming

Auburn National Banc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Auburn National Bancorporation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental drivers, Auburn National is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Boyd Gaming

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Boyd Gaming are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Boyd Gaming is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Auburn National and Boyd Gaming

The main advantage of trading using opposite Auburn National and Boyd Gaming positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Auburn National 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 Auburn National Bancorporation 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.