Correlation Between Boyd Gaming and Ares Management

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

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

Diversification Opportunities for Boyd Gaming and Ares Management

0.92

Correlation Coefficient

Boyd Gaming  Ares Management

Almost no diversification

The 3 months correlation between Boyd and Ares is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Boyd Gaming and Ares Management Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ares Management Corp 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 Ares Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ares Management Corp has no effect on the direction of Boyd Gaming i.e., Boyd Gaming and Ares Management go up and down completely randomly.

Pair Corralation between Boyd Gaming and Ares Management

Assuming the 90 days trading horizon Boyd Gaming is expected to generate 0.96 times more return on investment than Ares Management. However, Boyd Gaming is 1.04 times less risky than Ares Management. It trades about 0.22 of its potential returns per unit of risk. Ares Management Corp is currently generating about 0.21 per unit of risk. If you would invest  5,333  in Boyd Gaming on September 12, 2024 and sell it today you would earn a total of  1,767  from holding Boyd Gaming or generate 33.13% return on investment over 90 days.

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

Boyd Gaming  vs.  Ares Management Corp

Boyd Gaming

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Boyd Gaming are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Boyd Gaming unveiled solid returns over the last few months and may actually be approaching a breakup point.

Ares Management Corp

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ares Management Corp are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Ares Management reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Boyd Gaming and Ares Management

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

The idea behind Boyd Gaming and Ares Management Corp 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.