Correlation Between Boyd Gaming and Dow Jones

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

By analyzing existing cross correlation between Boyd Gaming and Dow Jones Toys, you can compare the effects of market volatilities on Boyd Gaming and Dow Jones 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 Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boyd Gaming and Dow Jones.

Diversification Opportunities for Boyd Gaming and Dow Jones

-0.32

Correlation Coefficient

Boyd Gaming  Dow Jones

Very good diversification

The 3 months correlation between Boyd and Dow is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Boyd Gaming and Dow Jones Toys in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Toys 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 Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Toys has no effect on the direction of Boyd Gaming i.e., Boyd Gaming and Dow Jones go up and down completely randomly.

Pair Corralation between Boyd Gaming and Dow Jones

Considering the 90-day investment horizon Boyd Gaming is expected to under-perform the Dow Jones. In addition to that, Boyd Gaming is 3.8 times more volatile than Dow Jones Toys. It trades about -0.25 of its total potential returns per unit of risk. Dow Jones Toys is currently generating about 0.22 per unit of volatility. If you would invest  2,315  in Dow Jones Toys on February 5, 2024 and sell it today you would earn a total of  101.00  from holding Dow Jones Toys or generate 4.36% return on investment over 90 days.

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

Boyd Gaming  vs.  Dow Jones Toys

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.

Dow Jones Toys

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dow Jones Toys are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Dow Jones displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Boyd Gaming and Dow Jones

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

The idea behind Boyd Gaming and Dow Jones Toys 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..