Correlation Between Globex Mining and Boyd Gaming

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

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

Diversification Opportunities for Globex Mining and Boyd Gaming

0.7

Correlation Coefficient

Globex Mining  Boyd Gaming

Poor diversification

The 3 months correlation between Globex and Boyd is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Globex Mining Enterprises and Boyd Gaming in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boyd Gaming and Globex Mining 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 Globex Mining Enterprises are associated (or correlated) with Boyd Gaming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boyd Gaming has no effect on the direction of Globex Mining i.e., Globex Mining and Boyd Gaming go up and down completely randomly.

Pair Corralation between Globex Mining and Boyd Gaming

Assuming the 90 days trading horizon Globex Mining Enterprises is expected to generate 1.08 times more return on investment than Boyd Gaming. However, Globex Mining is 1.08 times more volatile than Boyd Gaming. It trades about 0.04 of its potential returns per unit of risk. Boyd Gaming is currently generating about 0.04 per unit of risk. If you would invest  61.00  in Globex Mining Enterprises on October 11, 2024 and sell it today you would earn a total of  22.00  from holding Globex Mining Enterprises or generate 36.07% return on investment over 90 days.

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

Globex Mining Enterprises  vs.  Boyd Gaming

Globex Mining Enterprises

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Globex Mining Enterprises are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Globex Mining unveiled solid returns over the last few months and may actually be approaching a breakup point.

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 comparatively uncertain basic indicators, Boyd Gaming unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Globex Mining and Boyd Gaming

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

The idea behind Globex Mining Enterprises and Boyd Gaming 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.