Correlation Between Western Digital and Boyd Gaming
Can any of the company-specific risk be diversified away by investing in both Western Digital 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 Western Digital and Boyd Gaming into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Digital and Boyd Gaming, you can compare the effects of market volatilities on Western Digital 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 Western Digital with a short position of Boyd Gaming. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Digital and Boyd Gaming.
Diversification Opportunities for Western Digital and Boyd Gaming
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Western and Boyd is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Western Digital and Boyd Gaming in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boyd Gaming and Western Digital 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 Western Digital 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 Western Digital i.e., Western Digital and Boyd Gaming go up and down completely randomly.
Pair Corralation between Western Digital and Boyd Gaming
Considering the 90-day investment horizon Western Digital is expected to generate 2.36 times more return on investment than Boyd Gaming. However, Western Digital is 2.36 times more volatile than Boyd Gaming. It trades about 0.22 of its potential returns per unit of risk. Boyd Gaming is currently generating about 0.42 per unit of risk. If you would invest 6,522 in Western Digital on September 4, 2024 and sell it today you would earn a total of 821.00 from holding Western Digital or generate 12.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Western Digital vs. Boyd Gaming
Performance |
| Timeline |
| Western Digital |
| Boyd Gaming |
Western Digital and Boyd Gaming Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Digital and Boyd Gaming
The main advantage of trading using opposite Western Digital and Boyd Gaming positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Digital 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.| Western Digital vs. NetApp Inc | Western Digital vs. Logitech International SA | Western Digital vs. HP Inc | Western Digital vs. Dell Technologies |
| 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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