Correlation Between Boyd Gaming and Timken
Can any of the company-specific risk be diversified away by investing in both Boyd Gaming and Timken 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 Timken into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Boyd Gaming and Timken Company, you can compare the effects of market volatilities on Boyd Gaming and Timken 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 Timken. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boyd Gaming and Timken.
Diversification Opportunities for Boyd Gaming and Timken
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Boyd and Timken is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Boyd Gaming and Timken Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Timken Company 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 Timken. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Timken Company has no effect on the direction of Boyd Gaming i.e., Boyd Gaming and Timken go up and down completely randomly.
Pair Corralation between Boyd Gaming and Timken
Considering the 90-day investment horizon Boyd Gaming is expected to generate 0.63 times more return on investment than Timken. However, Boyd Gaming is 1.59 times less risky than Timken. It trades about 0.25 of its potential returns per unit of risk. Timken Company is currently generating about 0.01 per unit of risk. If you would invest 5,985 in Boyd Gaming on September 12, 2024 and sell it today you would earn a total of 1,580 from holding Boyd Gaming or generate 26.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Boyd Gaming vs. Timken Company
Performance |
| Timeline |
| Boyd Gaming |
| Timken Company |
Boyd Gaming and Timken Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boyd Gaming and Timken
The main advantage of trading using opposite Boyd Gaming and Timken positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boyd Gaming position performs unexpectedly, Timken 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 Timken will offset losses from the drop in Timken's long position.| Boyd Gaming vs. Flanigans Enterprises | Boyd Gaming vs. Good Times Restaurants | Boyd Gaming vs. Auburn National Bancorporation |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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