Correlation Between Boyd Gaming and Target Hospitality

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

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

Diversification Opportunities for Boyd Gaming and Target Hospitality

0.62

Correlation Coefficient

Boyd Gaming  Target Hospitality

Poor diversification

The 3 months correlation between Boyd and Target is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Boyd Gaming and Target Hospitality Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Target Hospitality Corp 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 Target Hospitality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Target Hospitality Corp has no effect on the direction of Boyd Gaming i.e., Boyd Gaming and Target Hospitality go up and down completely randomly.

Pair Corralation between Boyd Gaming and Target Hospitality

Considering the 90-day investment horizon Boyd Gaming is expected to under-perform the Target Hospitality. But the stock apears to be less risky and, when comparing its historical volatility, Boyd Gaming is 2.1 times less risky than Target Hospitality. The stock trades about -0.11 of its potential returns per unit of risk. The Target Hospitality Corp is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  850.00  in Target Hospitality Corp on October 10, 2024 and sell it today you would earn a total of  98.00  from holding Target Hospitality Corp or generate 11.53% return on investment over 90 days.

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

Boyd Gaming  vs.  Target Hospitality Corp

Boyd Gaming

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Boyd Gaming are ranked lower than 12 (%) 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.

Target Hospitality Corp

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Target Hospitality Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly abnormal technical indicators, Target Hospitality demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Boyd Gaming and Target Hospitality

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

The idea behind Boyd Gaming and Target Hospitality Corp 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.