Correlation Between AP Møller and Boyd Gaming
Can any of the company-specific risk be diversified away by investing in both AP Møller and Boyd Gaming 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 AP Møller and Boyd Gaming into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AP Mller and Boyd Gaming, you can compare the effects of market volatilities on AP Møller and Boyd Gaming 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 AP Møller with a short position of Boyd Gaming. Check out your portfolio center. Please also check ongoing floating volatility patterns of AP Møller and Boyd Gaming.
Diversification Opportunities for AP Møller and Boyd Gaming
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between DP4A and Boyd is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding AP Mller and Boyd Gaming in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boyd Gaming and AP Møller 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 AP Mller are associated (or correlated) with Boyd Gaming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boyd Gaming has no effect on the direction of AP Møller i.e., AP Møller and Boyd Gaming go up and down completely randomly.
Pair Corralation between AP Møller and Boyd Gaming
Assuming the 90 days trading horizon AP Mller is expected to generate 2.38 times more return on investment than Boyd Gaming. However, AP Møller is 2.38 times more volatile than Boyd Gaming. It trades about 0.1 of its potential returns per unit of risk. Boyd Gaming is currently generating about 0.05 per unit of risk. If you would invest 72,628 in AP Mller on September 1, 2024 and sell it today you would earn a total of 82,572 from holding AP Mller or generate 113.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.48% |
| Values | Daily Returns |
AP Mller vs. Boyd Gaming
Performance |
| Timeline |
| AP Møller |
| Boyd Gaming |
AP Møller and Boyd Gaming Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AP Møller and Boyd Gaming
The main advantage of trading using opposite AP Møller and Boyd Gaming positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AP Møller position performs unexpectedly, Boyd Gaming 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 Boyd Gaming will offset losses from the drop in Boyd Gaming's long position.| AP Møller vs. Microbot Medical | AP Møller vs. ONWARD MEDICAL BV | AP Møller vs. Clearside Biomedical | AP Møller vs. MeVis Medical Solutions |
| Boyd Gaming vs. Apple Inc | Boyd Gaming vs. Apple Inc | Boyd Gaming vs. Apple Inc | Boyd Gaming vs. Apple Inc |
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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