Correlation Between Smurfit WestRock and Boyd Gaming

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

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

Diversification Opportunities for Smurfit WestRock and Boyd Gaming

0.82

Correlation Coefficient

Smurfit WestRock  Boyd Gaming

Very poor diversification

The 3 months correlation between Smurfit and Boyd is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Smurfit WestRock plc and Boyd Gaming in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boyd Gaming and Smurfit WestRock 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 Smurfit WestRock plc 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 Smurfit WestRock i.e., Smurfit WestRock and Boyd Gaming go up and down completely randomly.

Pair Corralation between Smurfit WestRock and Boyd Gaming

Allowing for the 90-day total investment horizon Smurfit WestRock plc is expected to under-perform the Boyd Gaming. In addition to that, Smurfit WestRock is 1.53 times more volatile than Boyd Gaming. It trades about -0.11 of its total potential returns per unit of risk. Boyd Gaming is currently generating about -0.05 per unit of volatility. If you would invest  7,222  in Boyd Gaming on December 27, 2024 and sell it today you would lose (386.00) from holding Boyd Gaming or give up 5.34% of portfolio value over 90 days.

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

Smurfit WestRock plc  vs.  Boyd Gaming

Smurfit WestRock plc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Smurfit WestRock plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Boyd Gaming

Risk-Adjusted Performance

Very Weak

Over the last 90 days Boyd Gaming has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Boyd Gaming is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Smurfit WestRock and Boyd Gaming

The main advantage of trading using opposite Smurfit WestRock and Boyd Gaming positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smurfit WestRock 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 Smurfit WestRock plc 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.