Correlation Between Boyd Gaming and TROPHY GAMES

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

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

Diversification Opportunities for Boyd Gaming and TROPHY GAMES

-0.28

Correlation Coefficient

Boyd Gaming  TROPHY GAMES

Very good diversification

The 3 months correlation between Boyd and TROPHY is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Boyd Gaming and TROPHY GAMES DEV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TROPHY GAMES DEV 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 TROPHY GAMES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TROPHY GAMES DEV has no effect on the direction of Boyd Gaming i.e., Boyd Gaming and TROPHY GAMES go up and down completely randomly.

Pair Corralation between Boyd Gaming and TROPHY GAMES

Assuming the 90 days trading horizon Boyd Gaming is expected to under-perform the TROPHY GAMES. But the stock apears to be less risky and, when comparing its historical volatility, Boyd Gaming is 1.52 times less risky than TROPHY GAMES. The stock trades about -0.07 of its potential returns per unit of risk. The TROPHY GAMES DEV is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  78.00  in TROPHY GAMES DEV on December 26, 2024 and sell it today you would earn a total of  12.00  from holding TROPHY GAMES DEV or generate 15.38% return on investment over 90 days.

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

Boyd Gaming  vs.  TROPHY GAMES DEV

Boyd Gaming

Risk-Adjusted Performance

Very Weak

Over the last 90 days Boyd Gaming has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

TROPHY GAMES DEV

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TROPHY GAMES DEV are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, TROPHY GAMES reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Boyd Gaming and TROPHY GAMES

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

The idea behind Boyd Gaming and TROPHY GAMES DEV 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.