Correlation Between Premium Brands and Boyd Group

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

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

Diversification Opportunities for Premium Brands and Boyd Group

-0.03

Correlation Coefficient

Premium Brands  Boyd Group

Good diversification

The 3 months correlation between Premium and Boyd is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Premium Brands Holdings 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 Premium Brands 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 Premium Brands Holdings 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 Premium Brands i.e., Premium Brands and Boyd Group go up and down completely randomly.

Pair Corralation between Premium Brands and Boyd Group

Assuming the 90 days trading horizon Premium Brands Holdings is expected to under-perform the Boyd Group. But the stock apears to be less risky and, when comparing its historical volatility, Premium Brands Holdings is 1.21 times less risky than Boyd Group. The stock trades about -0.08 of its potential returns per unit of risk. The Boyd Group Services is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  25,673  in Boyd Group Services on October 21, 2024 and sell it today you would lose (3,520) from holding Boyd Group Services or give up 13.71% of portfolio value over 90 days.

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

Premium Brands Holdings  vs.  Boyd Group Services

Premium Brands Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Premium Brands Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Boyd Group Services

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Boyd Group Services are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Boyd Group is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Premium Brands and Boyd Group

The main advantage of trading using opposite Premium Brands and Boyd Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Premium Brands 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 Premium Brands Holdings 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.