Correlation Between Bt Brands and Boyd Gaming

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

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

Diversification Opportunities for Bt Brands and Boyd Gaming

-0.36

Correlation Coefficient

Bt Brands  Boyd Gaming

Very good diversification

The 3 months correlation between BTBD and Boyd is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Bt Brands and Boyd Gaming in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boyd Gaming and Bt Brands 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 Bt Brands are associated (or correlated) with Boyd Gaming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boyd Gaming has no effect on the direction of Bt Brands i.e., Bt Brands and Boyd Gaming go up and down completely randomly.

Pair Corralation between Bt Brands and Boyd Gaming

Given the investment horizon of 90 days Bt Brands is expected to generate 3.32 times more return on investment than Boyd Gaming. However, Bt Brands is 3.32 times more volatile than Boyd Gaming. It trades about 0.02 of its potential returns per unit of risk. Boyd Gaming is currently generating about 0.05 per unit of risk. If you would invest  180.00  in Bt Brands on September 19, 2024 and sell it today you would lose (16.00) from holding Bt Brands or give up 8.89% of portfolio value over 90 days.

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

Bt Brands  vs.  Boyd Gaming

Bt Brands

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bt Brands are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental drivers, Bt Brands is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

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 rather unfluctuating basic indicators, Boyd Gaming exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bt Brands and Boyd Gaming

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

The idea behind Bt Brands and Boyd Gaming 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.