Correlation Between Ritchie Bros and Boyd Group

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

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

Diversification Opportunities for Ritchie Bros and Boyd Group

0.39

Correlation Coefficient

Ritchie Bros  Boyd Group

Weak diversification

The 3 months correlation between Ritchie and Boyd is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Ritchie Bros Auctioneers and Boyd Group Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boyd Group Services and Ritchie Bros 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 Ritchie Bros Auctioneers are associated (or correlated) with Boyd Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boyd Group Services has no effect on the direction of Ritchie Bros i.e., Ritchie Bros and Boyd Group go up and down completely randomly.

Pair Corralation between Ritchie Bros and Boyd Group

Assuming the 90 days trading horizon Ritchie Bros Auctioneers is expected to generate 0.86 times more return on investment than Boyd Group. However, Ritchie Bros Auctioneers is 1.16 times less risky than Boyd Group. It trades about 0.0 of its potential returns per unit of risk. Boyd Group Services is currently generating about -0.09 per unit of risk. If you would invest  13,079  in Ritchie Bros Auctioneers on September 21, 2024 and sell it today you would lose (7.00) from holding Ritchie Bros Auctioneers or give up 0.05% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.65%
Values	Daily Returns

Ritchie Bros Auctioneers  vs.  Boyd Group Services

Ritchie Bros Auctioneers

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ritchie Bros Auctioneers are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Ritchie Bros displayed solid returns over the last few months and may actually be approaching a breakup point.

Boyd Group Services

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Boyd Group Services are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Boyd Group is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Ritchie Bros and Boyd Group

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

The idea behind Ritchie Bros Auctioneers and Boyd Group Services 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.