Correlation Between Boyd Gaming and Insteel Industries

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

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

Diversification Opportunities for Boyd Gaming and Insteel Industries

0.27

Correlation Coefficient

Boyd Gaming  Insteel Industries

Modest diversification

The 3 months correlation between Boyd and Insteel is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Boyd Gaming and Insteel Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insteel Industries 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 Insteel Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Insteel Industries has no effect on the direction of Boyd Gaming i.e., Boyd Gaming and Insteel Industries go up and down completely randomly.

Pair Corralation between Boyd Gaming and Insteel Industries

Assuming the 90 days trading horizon Boyd Gaming is expected to generate 0.82 times more return on investment than Insteel Industries. However, Boyd Gaming is 1.22 times less risky than Insteel Industries. It trades about 0.04 of its potential returns per unit of risk. Insteel Industries is currently generating about 0.01 per unit of risk. If you would invest  5,576  in Boyd Gaming on October 23, 2024 and sell it today you would earn a total of  1,574  from holding Boyd Gaming or generate 28.23% return on investment over 90 days.

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

Boyd Gaming  vs.  Insteel Industries

Boyd Gaming

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Boyd Gaming are ranked lower than 12 (%) 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.

Insteel Industries

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Insteel Industries are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Insteel Industries may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Boyd Gaming and Insteel Industries

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

The idea behind Boyd Gaming and Insteel Industries 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.