Correlation Between Skechers USA and Boyd Gaming

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

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

Diversification Opportunities for Skechers USA and Boyd Gaming

0.45

Correlation Coefficient

Skechers USA  Boyd Gaming

Very weak diversification

The 3 months correlation between Skechers and Boyd is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Skechers USA and Boyd Gaming in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boyd Gaming and Skechers USA 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 Skechers USA 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 Skechers USA i.e., Skechers USA and Boyd Gaming go up and down completely randomly.

Pair Corralation between Skechers USA and Boyd Gaming

Considering the 90-day investment horizon Skechers USA is expected to generate 1.33 times less return on investment than Boyd Gaming. In addition to that, Skechers USA is 2.25 times more volatile than Boyd Gaming. It trades about 0.05 of its total potential returns per unit of risk. Boyd Gaming is currently generating about 0.15 per unit of volatility. If you would invest  7,133  in Boyd Gaming on November 19, 2024 and sell it today you would earn a total of  720.00  from holding Boyd Gaming or generate 10.09% return on investment over 90 days.

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

Skechers USA  vs.  Boyd Gaming

Skechers USA

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Skechers USA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak forward-looking signals, Skechers USA may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Boyd Gaming

Risk-Adjusted Performance

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 rather unfluctuating basic indicators, Boyd Gaming may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Skechers USA and Boyd Gaming

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

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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.