Correlation Between Enghouse Systems and Boyd Group

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

By analyzing existing cross correlation between Enghouse Systems and Boyd Group Services, you can compare the effects of market volatilities on Enghouse Systems and Boyd Group 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 Enghouse Systems with a short position of Boyd Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enghouse Systems and Boyd Group.

Diversification Opportunities for Enghouse Systems and Boyd Group

-0.75

Correlation Coefficient

Enghouse Systems  Boyd Group

Pay attention - limited upside

The 3 months correlation between Enghouse and Boyd is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Enghouse Systems and Boyd Group Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boyd Group Services and Enghouse Systems 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 Enghouse Systems are associated (or correlated) with Boyd Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boyd Group Services has no effect on the direction of Enghouse Systems i.e., Enghouse Systems and Boyd Group go up and down completely randomly.

Pair Corralation between Enghouse Systems and Boyd Group

Assuming the 90 days trading horizon Enghouse Systems is expected to generate 1.18 times more return on investment than Boyd Group. However, Enghouse Systems is 1.18 times more volatile than Boyd Group Services. It trades about 0.03 of its potential returns per unit of risk. Boyd Group Services is currently generating about -0.08 per unit of risk. If you would invest  3,034  in Enghouse Systems on September 12, 2024 and sell it today you would earn a total of  62.00  from holding Enghouse Systems or generate 2.04% return on investment over 90 days.

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

Enghouse Systems  vs.  Boyd Group Services

Enghouse Systems

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Enghouse Systems are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Enghouse Systems is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Boyd Group Services

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Boyd Group Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Enghouse Systems and Boyd Group

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

The idea behind Enghouse Systems and Boyd Group Services 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.