Correlation Between Boyd Gaming and Galaxy Entertainment

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

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

Diversification Opportunities for Boyd Gaming and Galaxy Entertainment

0.08

Correlation Coefficient

Boyd Gaming  Galaxy Entertainment

Significant diversification

The 3 months correlation between Boyd and Galaxy is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Boyd Gaming and Galaxy Entertainment Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Galaxy Entertainment and Boyd Gaming 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 Boyd Gaming are associated (or correlated) with Galaxy Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Galaxy Entertainment has no effect on the direction of Boyd Gaming i.e., Boyd Gaming and Galaxy Entertainment go up and down completely randomly.

Pair Corralation between Boyd Gaming and Galaxy Entertainment

Assuming the 90 days horizon Boyd Gaming is expected to generate 16.11 times less return on investment than Galaxy Entertainment. But when comparing it to its historical volatility, Boyd Gaming is 1.69 times less risky than Galaxy Entertainment. It trades about 0.01 of its potential returns per unit of risk. Galaxy Entertainment Group is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  394.00  in Galaxy Entertainment Group on September 23, 2024 and sell it today you would earn a total of  26.00  from holding Galaxy Entertainment Group or generate 6.6% return on investment over 90 days.

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

Boyd Gaming  vs.  Galaxy Entertainment Group

Boyd Gaming

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Boyd Gaming are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Boyd Gaming reported solid returns over the last few months and may actually be approaching a breakup point.

Galaxy Entertainment

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Galaxy Entertainment Group are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Galaxy Entertainment reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Boyd Gaming and Galaxy Entertainment

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

The idea behind Boyd Gaming and Galaxy Entertainment Group 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.