Correlation Between Boyd Gaming and Evolution Mining

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

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

Diversification Opportunities for Boyd Gaming and Evolution Mining

-0.07

Correlation Coefficient

Boyd Gaming  Evolution Mining

Good diversification

The 3 months correlation between Boyd and Evolution is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Boyd Gaming and Evolution Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolution Mining 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 Evolution Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evolution Mining has no effect on the direction of Boyd Gaming i.e., Boyd Gaming and Evolution Mining go up and down completely randomly.

Pair Corralation between Boyd Gaming and Evolution Mining

Considering the 90-day investment horizon Boyd Gaming is expected to generate 0.51 times more return on investment than Evolution Mining. However, Boyd Gaming is 1.97 times less risky than Evolution Mining. It trades about 0.18 of its potential returns per unit of risk. Evolution Mining is currently generating about 0.03 per unit of risk. If you would invest  6,416  in Boyd Gaming on October 24, 2024 and sell it today you would earn a total of  1,148  from holding Boyd Gaming or generate 17.89% 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.  Evolution Mining

Boyd Gaming

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Boyd Gaming are ranked lower than 14 (%) 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.

Evolution Mining

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Evolution Mining are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Evolution Mining is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Boyd Gaming and Evolution Mining

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

The idea behind Boyd Gaming and Evolution Mining 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.