Correlation Between Boyd Gaming and Healthy Choice

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

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

Diversification Opportunities for Boyd Gaming and Healthy Choice

-0.6

Correlation Coefficient

Boyd Gaming  Healthy Choice

Excellent diversification

The 3 months correlation between Boyd and Healthy is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Boyd Gaming and Healthy Choice Wellness in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Healthy Choice Wellness 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 Healthy Choice. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Healthy Choice Wellness has no effect on the direction of Boyd Gaming i.e., Boyd Gaming and Healthy Choice go up and down completely randomly.

Pair Corralation between Boyd Gaming and Healthy Choice

Considering the 90-day investment horizon Boyd Gaming is expected to generate 13.95 times less return on investment than Healthy Choice. But when comparing it to its historical volatility, Boyd Gaming is 26.08 times less risky than Healthy Choice. It trades about 0.33 of its potential returns per unit of risk. Healthy Choice Wellness is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  87.00  in Healthy Choice Wellness on October 24, 2024 and sell it today you would earn a total of  36.00  from holding Healthy Choice Wellness or generate 41.38% return on investment over 90 days.

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

Boyd Gaming  vs.  Healthy Choice Wellness

Boyd Gaming

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Boyd Gaming are ranked lower than 13 (%) 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.

Healthy Choice Wellness

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Healthy Choice Wellness has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Boyd Gaming and Healthy Choice

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

The idea behind Boyd Gaming and Healthy Choice Wellness 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.