Correlation Between Park Hotels and Boyd Gaming

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

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

Diversification Opportunities for Park Hotels and Boyd Gaming

0.68

Correlation Coefficient

Park Hotels  Boyd Gaming

Poor diversification

The 3 months correlation between Park and Boyd is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Park Hotels Resorts and Boyd Gaming in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boyd Gaming and Park Hotels 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 Park Hotels Resorts 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 Park Hotels i.e., Park Hotels and Boyd Gaming go up and down completely randomly.

Pair Corralation between Park Hotels and Boyd Gaming

Allowing for the 90-day total investment horizon Park Hotels Resorts is expected to generate 1.69 times more return on investment than Boyd Gaming. However, Park Hotels is 1.69 times more volatile than Boyd Gaming. It trades about 0.18 of its potential returns per unit of risk. Boyd Gaming is currently generating about 0.19 per unit of risk. If you would invest  1,449  in Park Hotels Resorts on September 16, 2024 and sell it today you would earn a total of  79.00  from holding Park Hotels Resorts or generate 5.45% return on investment over 90 days.

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

Park Hotels Resorts  vs.  Boyd Gaming

Park Hotels Resorts

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Park Hotels Resorts are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent forward-looking signals, Park Hotels may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Boyd Gaming

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Boyd Gaming are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, Boyd Gaming exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Park Hotels and Boyd Gaming

The main advantage of trading using opposite Park Hotels and Boyd Gaming positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Park Hotels 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 Park Hotels Resorts 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..