Correlation Between Boyd Gaming and Starbucks
Can any of the company-specific risk be diversified away by investing in both Boyd Gaming and Starbucks 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 Starbucks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Boyd Gaming and Starbucks, you can compare the effects of market volatilities on Boyd Gaming and Starbucks 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 Starbucks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boyd Gaming and Starbucks.
Diversification Opportunities for Boyd Gaming and Starbucks
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Boyd and Starbucks is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Boyd Gaming and Starbucks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Starbucks 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 Starbucks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Starbucks has no effect on the direction of Boyd Gaming i.e., Boyd Gaming and Starbucks go up and down completely randomly.
Pair Corralation between Boyd Gaming and Starbucks
Considering the 90-day investment horizon Boyd Gaming is expected to generate 1.49 times more return on investment than Starbucks. However, Boyd Gaming is 1.49 times more volatile than Starbucks. It trades about 0.17 of its potential returns per unit of risk. Starbucks is currently generating about 0.1 per unit of risk. If you would invest 6,465 in Boyd Gaming on August 30, 2024 and sell it today you would earn a total of 845.00 from holding Boyd Gaming or generate 13.07% 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. Starbucks
Performance |
| Timeline |
| Boyd Gaming |
| Starbucks |
Boyd Gaming and Starbucks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boyd Gaming and Starbucks
The main advantage of trading using opposite Boyd Gaming and Starbucks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boyd Gaming position performs unexpectedly, Starbucks 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 Starbucks will offset losses from the drop in Starbucks' 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 |
| Starbucks vs. Chipotle Mexican Grill | Starbucks vs. Dominos Pizza | Starbucks vs. Yum Brands | Starbucks vs. The Wendys Co |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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