Correlation Between Boyd Gaming and Redcare Pharmacy

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

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

Diversification Opportunities for Boyd Gaming and Redcare Pharmacy

-0.22

Correlation Coefficient

Boyd Gaming  Redcare Pharmacy

Very good diversification

The 3 months correlation between Boyd and Redcare is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Boyd Gaming and Redcare Pharmacy NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Redcare Pharmacy 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 Redcare Pharmacy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Redcare Pharmacy has no effect on the direction of Boyd Gaming i.e., Boyd Gaming and Redcare Pharmacy go up and down completely randomly.

Pair Corralation between Boyd Gaming and Redcare Pharmacy

Assuming the 90 days trading horizon Boyd Gaming is expected to generate 0.53 times more return on investment than Redcare Pharmacy. However, Boyd Gaming is 1.87 times less risky than Redcare Pharmacy. It trades about 0.11 of its potential returns per unit of risk. Redcare Pharmacy NV is currently generating about -0.09 per unit of risk. If you would invest  6,584  in Boyd Gaming on October 26, 2024 and sell it today you would earn a total of  666.00  from holding Boyd Gaming or generate 10.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Boyd Gaming  vs.  Redcare Pharmacy NV

Boyd Gaming

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Boyd Gaming are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Boyd Gaming may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Redcare Pharmacy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Redcare Pharmacy NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's fundamental indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Boyd Gaming and Redcare Pharmacy

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

The idea behind Boyd Gaming and Redcare Pharmacy NV 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.