Correlation Between Scientific Games and Boyd Gaming

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

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

Diversification Opportunities for Scientific Games and Boyd Gaming

0.48

Correlation Coefficient

Scientific Games  Boyd Gaming

Very weak diversification

The 3 months correlation between Scientific and Boyd is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Scientific Games and Boyd Gaming in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boyd Gaming and Scientific Games 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 Scientific Games 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 Scientific Games i.e., Scientific Games and Boyd Gaming go up and down completely randomly.

Pair Corralation between Scientific Games and Boyd Gaming

Assuming the 90 days horizon Scientific Games is expected to generate 1.18 times more return on investment than Boyd Gaming. However, Scientific Games is 1.18 times more volatile than Boyd Gaming. It trades about 0.05 of its potential returns per unit of risk. Boyd Gaming is currently generating about 0.04 per unit of risk. If you would invest  5,650  in Scientific Games on October 11, 2024 and sell it today you would earn a total of  2,550  from holding Scientific Games or generate 45.13% return on investment over 90 days.

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

Scientific Games  vs.  Boyd Gaming

Scientific Games

Risk-Adjusted Performance

0 of 100

Very Weak

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

Boyd Gaming

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Boyd Gaming are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Boyd Gaming unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Scientific Games and Boyd Gaming

The main advantage of trading using opposite Scientific Games and Boyd Gaming positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scientific Games 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 Scientific Games 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.