Correlation Between Wendys and Boyd Gaming

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

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

Diversification Opportunities for Wendys and Boyd Gaming

-0.29

Correlation Coefficient

Wendys  Boyd Gaming

Very good diversification

The 3 months correlation between Wendys and Boyd is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding The Wendys Co and Boyd Gaming in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boyd Gaming and Wendys 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 The Wendys Co 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 Wendys i.e., Wendys and Boyd Gaming go up and down completely randomly.

Pair Corralation between Wendys and Boyd Gaming

Considering the 90-day investment horizon The Wendys Co is expected to under-perform the Boyd Gaming. But the stock apears to be less risky and, when comparing its historical volatility, The Wendys Co is 1.27 times less risky than Boyd Gaming. The stock trades about -0.65 of its potential returns per unit of risk. The Boyd Gaming is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest  7,451  in Boyd Gaming on October 9, 2024 and sell it today you would lose (215.00) from holding Boyd Gaming or give up 2.89% of portfolio value over 90 days.

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

The Wendys Co  vs.  Boyd Gaming

The Wendys

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Wendys Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

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 rather unfluctuating basic indicators, Boyd Gaming exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Wendys and Boyd Gaming

The main advantage of trading using opposite Wendys and Boyd Gaming positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wendys 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 The Wendys Co 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.