Correlation Between Metro and Boyd Group

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

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

Diversification Opportunities for Metro and Boyd Group

-0.33

Correlation Coefficient

Metro  Boyd Group

Very good diversification

The 3 months correlation between Metro and Boyd is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Metro Inc 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 Metro 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 Metro Inc 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 Metro i.e., Metro and Boyd Group go up and down completely randomly.

Pair Corralation between Metro and Boyd Group

Assuming the 90 days trading horizon Metro Inc is expected to under-perform the Boyd Group. But the stock apears to be less risky and, when comparing its historical volatility, Metro Inc is 1.99 times less risky than Boyd Group. The stock trades about -0.06 of its potential returns per unit of risk. The Boyd Group Services is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  21,470  in Boyd Group Services on October 24, 2024 and sell it today you would earn a total of  1,365  from holding Boyd Group Services or generate 6.36% return on investment over 90 days.

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

Metro Inc  vs.  Boyd Group Services

Metro Inc

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Metro Inc are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Metro may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Boyd Group Services

Risk-Adjusted Performance

8 of 100

OK

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

Pair Trading with Metro and Boyd Group

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