Correlation Between Boyd Group and GoldMining

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

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

Diversification Opportunities for Boyd Group and GoldMining

-0.12

Correlation Coefficient

Boyd Group  GoldMining

Good diversification

The 3 months correlation between Boyd and GoldMining is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Boyd Group Services and GoldMining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GoldMining and Boyd Group 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 Group Services are associated (or correlated) with GoldMining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GoldMining has no effect on the direction of Boyd Group i.e., Boyd Group and GoldMining go up and down completely randomly.

Pair Corralation between Boyd Group and GoldMining

Assuming the 90 days trading horizon Boyd Group is expected to generate 1.9 times less return on investment than GoldMining. But when comparing it to its historical volatility, Boyd Group Services is 1.28 times less risky than GoldMining. It trades about 0.01 of its potential returns per unit of risk. GoldMining is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  117.00  in GoldMining on December 28, 2024 and sell it today you would earn a total of  1.00  from holding GoldMining or generate 0.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Boyd Group Services  vs.  GoldMining

Boyd Group Services

Risk-Adjusted Performance

Very Weak

Over the last 90 days Boyd Group Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Boyd Group is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

GoldMining

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GoldMining are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, GoldMining is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Boyd Group and GoldMining

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

The idea behind Boyd Group Services and GoldMining 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.