Correlation Between Boyd Gaming and Church Dwight
Can any of the company-specific risk be diversified away by investing in both Boyd Gaming and Church Dwight 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 Church Dwight into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Boyd Gaming and Church Dwight, you can compare the effects of market volatilities on Boyd Gaming and Church Dwight 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 Church Dwight. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boyd Gaming and Church Dwight.
Diversification Opportunities for Boyd Gaming and Church Dwight
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Boyd and Church is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Boyd Gaming and Church Dwight in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Church Dwight 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 Church Dwight. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Church Dwight has no effect on the direction of Boyd Gaming i.e., Boyd Gaming and Church Dwight go up and down completely randomly.
Pair Corralation between Boyd Gaming and Church Dwight
Considering the 90-day investment horizon Boyd Gaming is expected to generate 0.9 times more return on investment than Church Dwight. However, Boyd Gaming is 1.11 times less risky than Church Dwight. It trades about 0.14 of its potential returns per unit of risk. Church Dwight is currently generating about -0.1 per unit of risk. If you would invest 7,387 in Boyd Gaming on September 13, 2024 and sell it today you would earn a total of 177.00 from holding Boyd Gaming or generate 2.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Boyd Gaming vs. Church Dwight
Performance |
| Timeline |
| Boyd Gaming |
| Church Dwight |
Boyd Gaming and Church Dwight Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boyd Gaming and Church Dwight
The main advantage of trading using opposite Boyd Gaming and Church Dwight positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boyd Gaming position performs unexpectedly, Church Dwight 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 Church Dwight will offset losses from the drop in Church Dwight's long position.The idea behind Boyd Gaming and Church Dwight 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.| Church Dwight vs. The Clorox | Church Dwight vs. Colgate Palmolive | Church Dwight vs. Unilever PLC ADR | Church Dwight vs. Kimberly Clark |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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