Correlation Between Boyd Gaming and CAREER EDUCATION

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

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

Diversification Opportunities for Boyd Gaming and CAREER EDUCATION

0.92

Correlation Coefficient

Boyd Gaming  CAREER EDUCATION

Almost no diversification

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

Pair Corralation between Boyd Gaming and CAREER EDUCATION

Assuming the 90 days trading horizon Boyd Gaming is expected to generate 0.9 times more return on investment than CAREER EDUCATION. However, Boyd Gaming is 1.11 times less risky than CAREER EDUCATION. It trades about 0.37 of its potential returns per unit of risk. CAREER EDUCATION is currently generating about 0.24 per unit of risk. If you would invest  6,700  in Boyd Gaming on October 24, 2024 and sell it today you would earn a total of  600.00  from holding Boyd Gaming or generate 8.96% 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.  CAREER EDUCATION

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. In spite of comparatively fragile basic indicators, Boyd Gaming unveiled solid returns over the last few months and may actually be approaching a breakup point.

CAREER EDUCATION

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CAREER EDUCATION are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, CAREER EDUCATION exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Boyd Gaming and CAREER EDUCATION

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

The idea behind Boyd Gaming and CAREER EDUCATION 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.