Correlation Between Webster Financial and Boyd Gaming

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Can any of the company-specific risk be diversified away by investing in both Webster Financial 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 Webster Financial and Boyd Gaming into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Webster Financial and Boyd Gaming, you can compare the effects of market volatilities on Webster Financial 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 Webster Financial with a short position of Boyd Gaming. Check out your portfolio center. Please also check ongoing floating volatility patterns of Webster Financial and Boyd Gaming.

Diversification Opportunities for Webster Financial and Boyd Gaming

WebsterBoydDiversified AwayWebsterBoydDiversified Away100%
0.49
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Webster and Boyd is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Webster Financial and Boyd Gaming in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boyd Gaming and Webster Financial 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 Webster Financial 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 Webster Financial i.e., Webster Financial and Boyd Gaming go up and down completely randomly.

Pair Corralation between Webster Financial and Boyd Gaming

Assuming the 90 days horizon Webster Financial is expected to generate 14.85 times less return on investment than Boyd Gaming. In addition to that, Webster Financial is 1.27 times more volatile than Boyd Gaming. It trades about 0.01 of its total potential returns per unit of risk. Boyd Gaming is currently generating about 0.11 per unit of volatility. If you would invest  6,784  in Boyd Gaming on November 18, 2024 and sell it today you would earn a total of  616.00  from holding Boyd Gaming or generate 9.08% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Webster Financial  vs.  Boyd Gaming

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -2024681012
JavaScript chart by amCharts 3.21.15WED BO5
       Timeline  
Webster Financial 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Webster Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Webster Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb5253545556575859
Boyd Gaming 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Boyd Gaming are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Boyd Gaming may actually be approaching a critical reversion point that can send shares even higher in March 2025.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb67686970717273747576

Webster Financial and Boyd Gaming Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-5.87-4.4-2.92-1.450.02461.493.014.536.04 0.050.100.150.20
JavaScript chart by amCharts 3.21.15WED BO5
       Returns  

Pair Trading with Webster Financial and Boyd Gaming

The main advantage of trading using opposite Webster Financial and Boyd Gaming positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Webster Financial 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 Webster Financial 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.

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