Correlation Between Media and Boyd Gaming

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

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

Diversification Opportunities for Media and Boyd Gaming

0.11

Correlation Coefficient

Media  Boyd Gaming

Average diversification

The 3 months correlation between Media and Boyd is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Media and Games and Boyd Gaming in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boyd Gaming and Media 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 Media and Games 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 Media i.e., Media and Boyd Gaming go up and down completely randomly.

Pair Corralation between Media and Boyd Gaming

Assuming the 90 days trading horizon Media and Games is expected to generate 2.21 times more return on investment than Boyd Gaming. However, Media is 2.21 times more volatile than Boyd Gaming. It trades about 0.05 of its potential returns per unit of risk. Boyd Gaming is currently generating about 0.04 per unit of risk. If you would invest  161.00  in Media and Games on October 18, 2024 and sell it today you would earn a total of  137.00  from holding Media and Games or generate 85.09% return on investment over 90 days.

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

Media and Games  vs.  Boyd Gaming

Media and Games

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Media and Games has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Boyd Gaming

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Boyd Gaming are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Boyd Gaming unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Media and Boyd Gaming

The main advantage of trading using opposite Media and Boyd Gaming positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Media 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 Media and Games 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.

Check out your portfolio center.

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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.