Correlation Between Krispy Kreme and Boyd Gaming

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

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

Diversification Opportunities for Krispy Kreme and Boyd Gaming

0.78

Correlation Coefficient

Krispy Kreme  Boyd Gaming

Poor diversification

The 3 months correlation between Krispy and Boyd is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Krispy Kreme and Boyd Gaming in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boyd Gaming and Krispy Kreme 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 Krispy Kreme are associated (or correlated) with Boyd Gaming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boyd Gaming has no effect on the direction of Krispy Kreme i.e., Krispy Kreme and Boyd Gaming go up and down completely randomly.

Pair Corralation between Krispy Kreme and Boyd Gaming

Given the investment horizon of 90 days Krispy Kreme is expected to under-perform the Boyd Gaming. In addition to that, Krispy Kreme is 2.57 times more volatile than Boyd Gaming. It trades about -0.24 of its total potential returns per unit of risk. Boyd Gaming is currently generating about -0.13 per unit of volatility. If you would invest  7,168  in Boyd Gaming on January 8, 2025 and sell it today you would lose (1,044) from holding Boyd Gaming or give up 14.56% of portfolio value over 90 days.

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

Krispy Kreme  vs.  Boyd Gaming

Krispy Kreme

Risk-Adjusted Performance

Very Weak

Over the last 90 days Krispy Kreme has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in May 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Boyd Gaming

Risk-Adjusted Performance

Very Weak

Over the last 90 days Boyd Gaming has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in May 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Krispy Kreme and Boyd Gaming

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

The idea behind Krispy Kreme and Boyd Gaming 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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.