Correlation Between Boyd Gaming and Rio Tinto
Can any of the company-specific risk be diversified away by investing in both Boyd Gaming and Rio Tinto 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 Rio Tinto into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Boyd Gaming and Rio Tinto Group, you can compare the effects of market volatilities on Boyd Gaming and Rio Tinto 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 Rio Tinto. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boyd Gaming and Rio Tinto.
Diversification Opportunities for Boyd Gaming and Rio Tinto
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Boyd and Rio is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Boyd Gaming and Rio Tinto Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rio Tinto Group 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 Rio Tinto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rio Tinto Group has no effect on the direction of Boyd Gaming i.e., Boyd Gaming and Rio Tinto go up and down completely randomly.
Pair Corralation between Boyd Gaming and Rio Tinto
Assuming the 90 days trading horizon Boyd Gaming is expected to generate 1.53 times more return on investment than Rio Tinto. However, Boyd Gaming is 1.53 times more volatile than Rio Tinto Group. It trades about -0.04 of its potential returns per unit of risk. Rio Tinto Group is currently generating about -0.43 per unit of risk. If you would invest 7,083 in Boyd Gaming on October 10, 2024 and sell it today you would lose (83.00) from holding Boyd Gaming or give up 1.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Boyd Gaming vs. Rio Tinto Group
Performance |
| Timeline |
| Boyd Gaming |
| Rio Tinto Group |
Boyd Gaming and Rio Tinto Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boyd Gaming and Rio Tinto
The main advantage of trading using opposite Boyd Gaming and Rio Tinto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boyd Gaming position performs unexpectedly, Rio Tinto 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 Rio Tinto will offset losses from the drop in Rio Tinto's long position.| Boyd Gaming vs. Synovus Financial Corp | Boyd Gaming vs. Direct Line Insurance | Boyd Gaming vs. Discover Financial Services | Boyd Gaming vs. SINGAPORE AIRLINES |
| Rio Tinto vs. Tower Semiconductor | Rio Tinto vs. NXP Semiconductors NV | Rio Tinto vs. DATAGROUP SE | Rio Tinto vs. Taiwan Semiconductor Manufacturing |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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