Correlation Between Boyd Gaming and Vail Resorts

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

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

Diversification Opportunities for Boyd Gaming and Vail Resorts

0.76

Correlation Coefficient

Boyd Gaming  Vail Resorts

Poor diversification

The 3 months correlation between Boyd and Vail is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Boyd Gaming and Vail Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vail Resorts 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 Vail Resorts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vail Resorts has no effect on the direction of Boyd Gaming i.e., Boyd Gaming and Vail Resorts go up and down completely randomly.

Pair Corralation between Boyd Gaming and Vail Resorts

Assuming the 90 days horizon Boyd Gaming is expected to generate 5.0 times less return on investment than Vail Resorts. But when comparing it to its historical volatility, Boyd Gaming is 1.46 times less risky than Vail Resorts. It trades about 0.01 of its potential returns per unit of risk. Vail Resorts is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  17,000  in Vail Resorts on September 23, 2024 and sell it today you would earn a total of  300.00  from holding Vail Resorts or generate 1.76% return on investment over 90 days.

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

Boyd Gaming  vs.  Vail Resorts

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.

Vail Resorts

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vail Resorts are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Vail Resorts may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Boyd Gaming and Vail Resorts

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

The idea behind Boyd Gaming and Vail Resorts 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.

Check out your portfolio center.

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.