Correlation Between Boyd Gaming and Eterna Therapeutics

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

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

Diversification Opportunities for Boyd Gaming and Eterna Therapeutics

0.22

Correlation Coefficient

Boyd Gaming  Eterna Therapeutics

Modest diversification

The 3 months correlation between Boyd and Eterna is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Boyd Gaming and Eterna Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eterna Therapeutics and Boyd Gaming 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 Boyd Gaming are associated (or correlated) with Eterna Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eterna Therapeutics has no effect on the direction of Boyd Gaming i.e., Boyd Gaming and Eterna Therapeutics go up and down completely randomly.

Pair Corralation between Boyd Gaming and Eterna Therapeutics

Considering the 90-day investment horizon Boyd Gaming is expected to generate 0.77 times more return on investment than Eterna Therapeutics. However, Boyd Gaming is 1.29 times less risky than Eterna Therapeutics. It trades about -0.23 of its potential returns per unit of risk. Eterna Therapeutics is currently generating about -0.28 per unit of risk. If you would invest  6,566  in Boyd Gaming on February 4, 2024 and sell it today you would lose (1,150) from holding Boyd Gaming or give up 17.51% of portfolio value over 90 days.

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

Boyd Gaming  vs.  Eterna Therapeutics

Boyd Gaming

Risk-Adjusted Performance

0 of 100

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 unfluctuating performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in June 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Eterna Therapeutics

Risk-Adjusted Performance

3 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Eterna Therapeutics are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Eterna Therapeutics sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Boyd Gaming and Eterna Therapeutics

The main advantage of trading using opposite Boyd Gaming and Eterna Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boyd Gaming position performs unexpectedly, Eterna Therapeutics 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 Eterna Therapeutics will offset losses from the drop in Eterna Therapeutics' long position.

The idea behind Boyd Gaming and Eterna Therapeutics 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..