Correlation Between Boyd Gaming and Metalink

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

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

Diversification Opportunities for Boyd Gaming and Metalink

0.83

Correlation Coefficient

Boyd Gaming  Metalink

Very poor diversification

The 3 months correlation between Boyd and Metalink is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Boyd Gaming and Metalink in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metalink 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 Metalink. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metalink has no effect on the direction of Boyd Gaming i.e., Boyd Gaming and Metalink go up and down completely randomly.

Pair Corralation between Boyd Gaming and Metalink

Considering the 90-day investment horizon Boyd Gaming is expected to generate 5.37 times more return on investment than Metalink. However, Boyd Gaming is 5.37 times more volatile than Metalink. It trades about 0.13 of its potential returns per unit of risk. Metalink is currently generating about 0.13 per unit of risk. If you would invest  6,440  in Boyd Gaming on October 7, 2024 and sell it today you would earn a total of  852.00  from holding Boyd Gaming or generate 13.23% 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.  Metalink

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.

Metalink

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Metalink are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent essential indicators, Metalink is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Boyd Gaming and Metalink

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

The idea behind Boyd Gaming and Metalink 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.