Correlation Between Boyd Gaming and Universal Insurance

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

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

Diversification Opportunities for Boyd Gaming and Universal Insurance

-0.45

Correlation Coefficient

Boyd Gaming  Universal Insurance

Very good diversification

The 3 months correlation between Boyd and Universal is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Boyd Gaming and Universal Insurance Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Insurance 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 Universal Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Insurance has no effect on the direction of Boyd Gaming i.e., Boyd Gaming and Universal Insurance go up and down completely randomly.

Pair Corralation between Boyd Gaming and Universal Insurance

Considering the 90-day investment horizon Boyd Gaming is expected to generate 0.87 times more return on investment than Universal Insurance. However, Boyd Gaming is 1.15 times less risky than Universal Insurance. It trades about 0.19 of its potential returns per unit of risk. Universal Insurance Holdings is currently generating about -0.07 per unit of risk. If you would invest  6,891  in Boyd Gaming on May 6, 2025 and sell it today you would earn a total of  1,474  from holding Boyd Gaming or generate 21.39% 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.  Universal Insurance Holdings

Boyd Gaming

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Boyd Gaming are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, Boyd Gaming exhibited solid returns over the last few months and may actually be approaching a breakup point.

Universal Insurance

Risk-Adjusted Performance

Very Weak

Over the last 90 days Universal Insurance Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic 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 Universal Insurance

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

The idea behind Boyd Gaming and Universal Insurance Holdings 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.