Correlation Between Boyd Gaming and El Pollo

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

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

Diversification Opportunities for Boyd Gaming and El Pollo

-0.69

Correlation Coefficient

Boyd Gaming  El Pollo

Excellent diversification

The 3 months correlation between Boyd and LOCO is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Boyd Gaming and El Pollo Loco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on El Pollo Loco 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 El Pollo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of El Pollo Loco has no effect on the direction of Boyd Gaming i.e., Boyd Gaming and El Pollo go up and down completely randomly.

Pair Corralation between Boyd Gaming and El Pollo

Considering the 90-day investment horizon Boyd Gaming is expected to generate 0.52 times more return on investment than El Pollo. However, Boyd Gaming is 1.93 times less risky than El Pollo. It trades about 0.06 of its potential returns per unit of risk. El Pollo Loco is currently generating about -0.17 per unit of risk. If you would invest  7,414  in Boyd Gaming on September 12, 2024 and sell it today you would earn a total of  77.00  from holding Boyd Gaming or generate 1.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Boyd Gaming  vs.  El Pollo Loco

Boyd Gaming

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Boyd Gaming are ranked lower than 18 (%) 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.

El Pollo Loco

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days El Pollo Loco has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, El Pollo 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 El Pollo

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

The idea behind Boyd Gaming and El Pollo Loco 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.