Correlation Between Melexis NV and Boyd Gaming

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Can any of the company-specific risk be diversified away by investing in both Melexis NV 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 Melexis NV and Boyd Gaming into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Melexis NV and Boyd Gaming, you can compare the effects of market volatilities on Melexis NV 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 Melexis NV with a short position of Boyd Gaming. Check out your portfolio center. Please also check ongoing floating volatility patterns of Melexis NV and Boyd Gaming.

Diversification Opportunities for Melexis NV and Boyd Gaming

-0.82
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Melexis and Boyd is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Melexis NV and Boyd Gaming in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boyd Gaming and Melexis NV 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 Melexis NV 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 Melexis NV i.e., Melexis NV and Boyd Gaming go up and down completely randomly.

Pair Corralation between Melexis NV and Boyd Gaming

Assuming the 90 days horizon Melexis NV is expected to generate 1.17 times less return on investment than Boyd Gaming. In addition to that, Melexis NV is 1.54 times more volatile than Boyd Gaming. It trades about 0.02 of its total potential returns per unit of risk. Boyd Gaming is currently generating about 0.04 per unit of volatility. If you would invest  5,740  in Boyd Gaming on August 30, 2024 and sell it today you would earn a total of  1,570  from holding Boyd Gaming or generate 27.35% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Melexis NV  vs.  Boyd Gaming

 Performance 
       Timeline  
Melexis NV 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Melexis NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.
Boyd Gaming 

Risk-Adjusted Performance

15 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Boyd Gaming are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, Boyd Gaming exhibited solid returns over the last few months and may actually be approaching a breakup point.

Melexis NV and Boyd Gaming Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Melexis NV and Boyd Gaming

The main advantage of trading using opposite Melexis NV and Boyd Gaming positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Melexis NV 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.
The idea behind Melexis NV and Boyd Gaming pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.

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