Correlation Between Boyd Gaming and JAPAN TOBACCO

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

By analyzing existing cross correlation between Boyd Gaming and JAPAN TOBACCO UNSPADR12, you can compare the effects of market volatilities on Boyd Gaming and JAPAN TOBACCO 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 JAPAN TOBACCO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boyd Gaming and JAPAN TOBACCO.

Diversification Opportunities for Boyd Gaming and JAPAN TOBACCO

0.19

Correlation Coefficient

Boyd Gaming  JAPAN TOBACCO

Average diversification

The 3 months correlation between Boyd and JAPAN is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Boyd Gaming and JAPAN TOBACCO UNSPADR12 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JAPAN TOBACCO UNSPADR12 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 JAPAN TOBACCO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JAPAN TOBACCO UNSPADR12 has no effect on the direction of Boyd Gaming i.e., Boyd Gaming and JAPAN TOBACCO go up and down completely randomly.

Pair Corralation between Boyd Gaming and JAPAN TOBACCO

Assuming the 90 days trading horizon Boyd Gaming is expected to generate 1.64 times more return on investment than JAPAN TOBACCO. However, Boyd Gaming is 1.64 times more volatile than JAPAN TOBACCO UNSPADR12. It trades about 0.14 of its potential returns per unit of risk. JAPAN TOBACCO UNSPADR12 is currently generating about 0.02 per unit of risk. If you would invest  5,486  in Boyd Gaming on April 7, 2025 and sell it today you would earn a total of  1,414  from holding Boyd Gaming or generate 25.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Boyd Gaming  vs.  JAPAN TOBACCO UNSPADR12

Boyd Gaming

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Boyd Gaming are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Boyd Gaming unveiled solid returns over the last few months and may actually be approaching a breakup point.

JAPAN TOBACCO UNSPADR12

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in JAPAN TOBACCO UNSPADR12 are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, JAPAN TOBACCO is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Boyd Gaming and JAPAN TOBACCO

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

The idea behind Boyd Gaming and JAPAN TOBACCO UNSPADR12 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.