Correlation Between Boyd Gaming and Cannae Holdings

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

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

Diversification Opportunities for Boyd Gaming and Cannae Holdings

0.86

Correlation Coefficient

Boyd Gaming  Cannae Holdings

Very poor diversification

The 3 months correlation between Boyd and Cannae is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Boyd Gaming and Cannae Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cannae Holdings 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 Cannae Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cannae Holdings has no effect on the direction of Boyd Gaming i.e., Boyd Gaming and Cannae Holdings go up and down completely randomly.

Pair Corralation between Boyd Gaming and Cannae Holdings

Considering the 90-day investment horizon Boyd Gaming is expected to generate 0.95 times more return on investment than Cannae Holdings. However, Boyd Gaming is 1.05 times less risky than Cannae Holdings. It trades about 0.15 of its potential returns per unit of risk. Cannae Holdings is currently generating about 0.06 per unit of risk. If you would invest  5,410  in Boyd Gaming on October 7, 2024 and sell it today you would earn a total of  1,882  from holding Boyd Gaming or generate 34.79% return on investment over 90 days.

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

Boyd Gaming  vs.  Cannae Holdings

Boyd Gaming

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Boyd Gaming are ranked lower than 10 (%) 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.

Cannae Holdings

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cannae Holdings are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Cannae Holdings may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Boyd Gaming and Cannae Holdings

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

The idea behind Boyd Gaming and Cannae Holdings 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.