Correlation Between Galaxy Entertainment and Boyd Gaming

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

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

Diversification Opportunities for Galaxy Entertainment and Boyd Gaming

-0.1

Correlation Coefficient

Galaxy Entertainment  Boyd Gaming

Good diversification

The 3 months correlation between Galaxy and Boyd is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Galaxy Entertainment Group and Boyd Gaming in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boyd Gaming and Galaxy Entertainment 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 Galaxy Entertainment Group 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 Galaxy Entertainment i.e., Galaxy Entertainment and Boyd Gaming go up and down completely randomly.

Pair Corralation between Galaxy Entertainment and Boyd Gaming

Assuming the 90 days trading horizon Galaxy Entertainment is expected to generate 1.84 times less return on investment than Boyd Gaming. In addition to that, Galaxy Entertainment is 2.09 times more volatile than Boyd Gaming. It trades about 0.04 of its total potential returns per unit of risk. Boyd Gaming is currently generating about 0.16 per unit of volatility. If you would invest  4,932  in Boyd Gaming on October 2, 2024 and sell it today you would earn a total of  1,918  from holding Boyd Gaming or generate 38.89% return on investment over 90 days.

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

Galaxy Entertainment Group  vs.  Boyd Gaming

Galaxy Entertainment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Galaxy Entertainment Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Boyd Gaming

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Boyd Gaming are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Boyd Gaming reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Galaxy Entertainment and Boyd Gaming

The main advantage of trading using opposite Galaxy Entertainment and Boyd Gaming positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Galaxy Entertainment 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 Galaxy Entertainment Group 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.