Correlation Between Boyd Group and Service International

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

By analyzing existing cross correlation between Boyd Group Services and Service International, you can compare the effects of market volatilities on Boyd Group and Service International 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 Group with a short position of Service International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boyd Group and Service International.

Diversification Opportunities for Boyd Group and Service International

0.21

Correlation Coefficient

Boyd Group  Service International

Modest diversification

The 3 months correlation between Boyd and Service is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Boyd Group Services and Service International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Service International and Boyd Group 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 Group Services are associated (or correlated) with Service International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Service International has no effect on the direction of Boyd Group i.e., Boyd Group and Service International go up and down completely randomly.

Pair Corralation between Boyd Group and Service International

Assuming the 90 days horizon Boyd Group Services is expected to under-perform the Service International. In addition to that, Boyd Group is 1.27 times more volatile than Service International. It trades about -0.06 of its total potential returns per unit of risk. Service International is currently generating about 0.16 per unit of volatility. If you would invest  7,777  in Service International on September 3, 2024 and sell it today you would earn a total of  1,082  from holding Service International or generate 13.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Boyd Group Services  vs.  Service International

Boyd Group Services

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Boyd Group Services has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Boyd Group is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Service International

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Service International are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating fundamental indicators, Service International demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Boyd Group and Service International

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

The idea behind Boyd Group Services and Service International 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.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.