Correlation Between Service International and Boyd Group

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

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

Diversification Opportunities for Service International and Boyd Group

0.19

Correlation Coefficient

Service International  Boyd Group

Average diversification

The 3 months correlation between Service and Boyd is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Service International 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 Service International 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 Service International 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 Service International i.e., Service International and Boyd Group go up and down completely randomly.

Pair Corralation between Service International and Boyd Group

Considering the 90-day investment horizon Service International is expected to generate 0.79 times more return on investment than Boyd Group. However, Service International is 1.26 times less risky than Boyd Group. It trades about 0.16 of its potential returns per unit of risk. Boyd Group Services is currently generating about -0.03 per unit of risk. If you would invest  7,777  in Service International on August 31, 2024 and sell it today you would earn a total of  1,083  from holding Service International or generate 13.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Service International  vs.  Boyd Group Services

Service International

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Service International are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating fundamental indicators, Service International demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Boyd Group Services

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Boyd Group Services has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Boyd Group is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Service International and Boyd Group

The main advantage of trading using opposite Service International and Boyd Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Service International 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 Service International 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.