Correlation Between Boyd Gaming and NRG Energy
Can any of the company-specific risk be diversified away by investing in both Boyd Gaming and NRG Energy 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 NRG Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Boyd Gaming and NRG Energy, you can compare the effects of market volatilities on Boyd Gaming and NRG Energy 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 NRG Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boyd Gaming and NRG Energy.
Diversification Opportunities for Boyd Gaming and NRG Energy
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Boyd and NRG is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Boyd Gaming and NRG Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NRG Energy 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 NRG Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NRG Energy has no effect on the direction of Boyd Gaming i.e., Boyd Gaming and NRG Energy go up and down completely randomly.
Pair Corralation between Boyd Gaming and NRG Energy
Considering the 90-day investment horizon Boyd Gaming is expected to under-perform the NRG Energy. But the stock apears to be less risky and, when comparing its historical volatility, Boyd Gaming is 1.71 times less risky than NRG Energy. The stock trades about -0.05 of its potential returns per unit of risk. The NRG Energy is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 10,044 in NRG Energy on November 29, 2024 and sell it today you would earn a total of 200.00 from holding NRG Energy or generate 1.99% 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. NRG Energy
Performance |
| Timeline |
| Boyd Gaming |
| NRG Energy |
Boyd Gaming and NRG Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boyd Gaming and NRG Energy
The main advantage of trading using opposite Boyd Gaming and NRG Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boyd Gaming position performs unexpectedly, NRG Energy 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 NRG Energy will offset losses from the drop in NRG Energy's long position.| Boyd Gaming vs. MGM Resorts International | Boyd Gaming vs. Las Vegas Sands | Boyd Gaming vs. Wynn Resorts Limited | Boyd Gaming vs. Penn National Gaming |
| NRG Energy vs. TransAlta Corp | NRG Energy vs. Kenon Holdings | NRG Energy vs. Pampa Energia SA | NRG Energy vs. AGL Energy |
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 CEOs Directory module to screen CEOs from public companies around the world.
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