Correlation Between Boyd Gaming and Topbuild Corp

Can any of the company-specific risk be diversified away by investing in both Boyd Gaming and Topbuild Corp 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 Topbuild Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Boyd Gaming and Topbuild Corp, you can compare the effects of market volatilities on Boyd Gaming and Topbuild Corp 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 Topbuild Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boyd Gaming and Topbuild Corp.

Diversification Opportunities for Boyd Gaming and Topbuild Corp

-0.56

Correlation Coefficient

Boyd Gaming  Topbuild Corp

Excellent diversification

The 3 months correlation between Boyd and Topbuild is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Boyd Gaming and Topbuild Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Topbuild Corp 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 Topbuild Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Topbuild Corp has no effect on the direction of Boyd Gaming i.e., Boyd Gaming and Topbuild Corp go up and down completely randomly.

Pair Corralation between Boyd Gaming and Topbuild Corp

Considering the 90-day investment horizon Boyd Gaming is expected to generate 0.62 times more return on investment than Topbuild Corp. However, Boyd Gaming is 1.63 times less risky than Topbuild Corp. It trades about 0.21 of its potential returns per unit of risk. Topbuild Corp is currently generating about -0.07 per unit of risk. If you would invest  6,145  in Boyd Gaming on September 16, 2024 and sell it today you would earn a total of  1,350  from holding Boyd Gaming or generate 21.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Boyd Gaming  vs.  Topbuild Corp

Boyd Gaming

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Boyd Gaming are ranked lower than 16 (%) 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.

Topbuild Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Topbuild Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's essential indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Boyd Gaming and Topbuild Corp

The main advantage of trading using opposite Boyd Gaming and Topbuild Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boyd Gaming position performs unexpectedly, Topbuild Corp 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 Topbuild Corp will offset losses from the drop in Topbuild Corp's long position.

The idea behind Boyd Gaming and Topbuild Corp 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.