Correlation Between Bel Fuse and Boyd Gaming

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

Diversification Opportunities for Bel Fuse and Boyd Gaming

-0.48
  Correlation Coefficient

Very good diversification

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

Pair Corralation between Bel Fuse and Boyd Gaming

Assuming the 90 days horizon Bel Fuse A is expected to generate 1.93 times more return on investment than Boyd Gaming. However, Bel Fuse is 1.93 times more volatile than Boyd Gaming. It trades about 0.01 of its potential returns per unit of risk. Boyd Gaming is currently generating about 0.0 per unit of risk. If you would invest  8,601  in Bel Fuse A on November 28, 2024 and sell it today you would lose (22.00) from holding Bel Fuse A or give up 0.26% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Bel Fuse A  vs.  Boyd Gaming

 Performance 
       Timeline  
Bel Fuse A 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Bel Fuse A has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.
Boyd Gaming 

Risk-Adjusted Performance

Insignificant

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Boyd Gaming are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Boyd Gaming is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Bel Fuse and Boyd Gaming Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Bel Fuse and Boyd Gaming

The main advantage of trading using opposite Bel Fuse and Boyd Gaming positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bel Fuse 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.
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The idea behind Bel Fuse A 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.

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