Correlation Between Linde Plc and Boyd Gaming

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

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

Diversification Opportunities for Linde Plc and Boyd Gaming

-0.2

Correlation Coefficient

Linde Plc  Boyd Gaming

Good diversification

The 3 months correlation between Linde and Boyd is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Linde plc and Boyd Gaming in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boyd Gaming and Linde Plc 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 Linde plc 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 Linde Plc i.e., Linde Plc and Boyd Gaming go up and down completely randomly.

Pair Corralation between Linde Plc and Boyd Gaming

Assuming the 90 days trading horizon Linde plc is expected to under-perform the Boyd Gaming. But the stock apears to be less risky and, when comparing its historical volatility, Linde plc is 1.35 times less risky than Boyd Gaming. The stock trades about -0.04 of its potential returns per unit of risk. The Boyd Gaming is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  6,584  in Boyd Gaming on October 26, 2024 and sell it today you would earn a total of  666.00  from holding Boyd Gaming or generate 10.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Linde plc  vs.  Boyd Gaming

Linde plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Linde plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Linde Plc is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Boyd Gaming

Risk-Adjusted Performance

8 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Boyd Gaming are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Boyd Gaming may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Linde Plc and Boyd Gaming

The main advantage of trading using opposite Linde Plc and Boyd Gaming positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Linde Plc 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 Linde plc 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.