Correlation Between Boyd Gaming and KINDER

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

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

Diversification Opportunities for Boyd Gaming and KINDER

0.46

Correlation Coefficient

Boyd Gaming  KINDER

Very weak diversification

The 3 months correlation between Boyd and KINDER is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Boyd Gaming and KINDER MORGAN INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KINDER MORGAN INC 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 KINDER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KINDER MORGAN INC has no effect on the direction of Boyd Gaming i.e., Boyd Gaming and KINDER go up and down completely randomly.

Pair Corralation between Boyd Gaming and KINDER

Considering the 90-day investment horizon Boyd Gaming is expected to generate 1.46 times more return on investment than KINDER. However, Boyd Gaming is 1.46 times more volatile than KINDER MORGAN INC. It trades about 0.13 of its potential returns per unit of risk. KINDER MORGAN INC 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	Weak
Accuracy	87.3%
Values	Daily Returns

Boyd Gaming  vs.  KINDER MORGAN INC

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.

KINDER MORGAN INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KINDER MORGAN INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for KINDER MORGAN INC investors.

Pair Trading with Boyd Gaming and KINDER

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

The idea behind Boyd Gaming and KINDER MORGAN INC 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.