Correlation Between Boyd Gaming and Academy Sports

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

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

Diversification Opportunities for Boyd Gaming and Academy Sports

-0.13

Correlation Coefficient

Boyd Gaming  Academy Sports

Good diversification

The 3 months correlation between Boyd and Academy is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Boyd Gaming and Academy Sports Outdoors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Academy Sports Outdoors 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 Academy Sports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Academy Sports Outdoors has no effect on the direction of Boyd Gaming i.e., Boyd Gaming and Academy Sports go up and down completely randomly.

Pair Corralation between Boyd Gaming and Academy Sports

Considering the 90-day investment horizon Boyd Gaming is expected to generate 2.0 times less return on investment than Academy Sports. But when comparing it to its historical volatility, Boyd Gaming is 1.87 times less risky than Academy Sports. It trades about 0.04 of its potential returns per unit of risk. Academy Sports Outdoors is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  4,915  in Academy Sports Outdoors on November 28, 2024 and sell it today you would earn a total of  202.00  from holding Academy Sports Outdoors or generate 4.11% return on investment over 90 days.

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

Boyd Gaming  vs.  Academy Sports Outdoors

Boyd Gaming

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Boyd Gaming are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Boyd Gaming is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Academy Sports Outdoors

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Academy Sports Outdoors are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Academy Sports 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 Gaming and Academy Sports

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

The idea behind Boyd Gaming and Academy Sports Outdoors 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.