Correlation Between Boyd Gaming and Nufarm
Can any of the company-specific risk be diversified away by investing in both Boyd Gaming and Nufarm 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 Nufarm into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Boyd Gaming and Nufarm Limited, you can compare the effects of market volatilities on Boyd Gaming and Nufarm 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 Nufarm. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boyd Gaming and Nufarm.
Diversification Opportunities for Boyd Gaming and Nufarm
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Boyd and Nufarm is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Boyd Gaming and Nufarm Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nufarm Limited 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 Nufarm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nufarm Limited has no effect on the direction of Boyd Gaming i.e., Boyd Gaming and Nufarm go up and down completely randomly.
Pair Corralation between Boyd Gaming and Nufarm
Assuming the 90 days trading horizon Boyd Gaming is expected to generate 1.0 times more return on investment than Nufarm. However, Boyd Gaming is 1.0 times more volatile than Nufarm Limited. It trades about 0.14 of its potential returns per unit of risk. Nufarm Limited is currently generating about -0.07 per unit of risk. If you would invest 4,888 in Boyd Gaming on September 2, 2024 and sell it today you would earn a total of 2,012 from holding Boyd Gaming or generate 41.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Boyd Gaming vs. Nufarm Limited
Performance |
| Timeline |
| Boyd Gaming |
| Nufarm Limited |
Boyd Gaming and Nufarm Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boyd Gaming and Nufarm
The main advantage of trading using opposite Boyd Gaming and Nufarm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boyd Gaming position performs unexpectedly, Nufarm 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 Nufarm will offset losses from the drop in Nufarm's long position.| Boyd Gaming vs. Apple Inc | Boyd Gaming vs. Apple Inc | Boyd Gaming vs. Apple Inc | Boyd Gaming vs. Apple Inc |
Check out your portfolio center.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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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