Correlation Between Boyd Gaming and XIAO I

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

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

Diversification Opportunities for Boyd Gaming and XIAO I

0.15

Correlation Coefficient

Boyd Gaming  XIAO I

Average diversification

The 3 months correlation between Boyd and XIAO is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Boyd Gaming and XIAO I American in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XIAO I American 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 XIAO I. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XIAO I American has no effect on the direction of Boyd Gaming i.e., Boyd Gaming and XIAO I go up and down completely randomly.

Pair Corralation between Boyd Gaming and XIAO I

Considering the 90-day investment horizon Boyd Gaming is expected to generate 0.2 times more return on investment than XIAO I. However, Boyd Gaming is 5.04 times less risky than XIAO I. It trades about -0.13 of its potential returns per unit of risk. XIAO I American is currently generating about -0.07 per unit of risk. If you would invest  7,451  in Boyd Gaming on October 10, 2024 and sell it today you would lose (264.00) from holding Boyd Gaming or give up 3.54% of portfolio value over 90 days.

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

Boyd Gaming  vs.  XIAO I American

Boyd Gaming

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Boyd Gaming are ranked lower than 11 (%) 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.

XIAO I American

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in XIAO I American are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating basic indicators, XIAO I may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Boyd Gaming and XIAO I

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

The idea behind Boyd Gaming and XIAO I American 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.