Correlation Between Magna International and Boyd Gaming
Can any of the company-specific risk be diversified away by investing in both Magna International 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 Magna International and Boyd Gaming into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Magna International and Boyd Gaming, you can compare the effects of market volatilities on Magna International 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 Magna International with a short position of Boyd Gaming. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magna International and Boyd Gaming.
Diversification Opportunities for Magna International and Boyd Gaming
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Magna and Boyd is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Magna International and Boyd Gaming in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boyd Gaming and Magna International 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 Magna International 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 Magna International i.e., Magna International and Boyd Gaming go up and down completely randomly.
Pair Corralation between Magna International and Boyd Gaming
Considering the 90-day investment horizon Magna International is expected to under-perform the Boyd Gaming. In addition to that, Magna International is 1.48 times more volatile than Boyd Gaming. It trades about -0.1 of its total potential returns per unit of risk. Boyd Gaming is currently generating about 0.0 per unit of volatility. If you would invest 7,136 in Boyd Gaming on September 22, 2024 and sell it today you would lose (20.00) from holding Boyd Gaming or give up 0.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Magna International vs. Boyd Gaming
Performance |
| Timeline |
| Magna International |
| Boyd Gaming |
Magna International and Boyd Gaming Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magna International and Boyd Gaming
The main advantage of trading using opposite Magna International and Boyd Gaming positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magna International 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.| Magna International vs. Allison Transmission Holdings | Magna International vs. Aptiv PLC | Magna International vs. LKQ Corporation | Magna International vs. Lear Corporation |
| Boyd Gaming vs. MGM Resorts International | Boyd Gaming vs. Las Vegas Sands | Boyd Gaming vs. Wynn Resorts Limited | Boyd Gaming vs. Penn National Gaming |
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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