Correlation Between Citigroup and Churchill Downs
Can any of the company-specific risk be diversified away by investing in both Citigroup and Churchill Downs 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 Citigroup and Churchill Downs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Churchill Downs Incorporated, you can compare the effects of market volatilities on Citigroup and Churchill Downs 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 Citigroup with a short position of Churchill Downs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Churchill Downs.
Diversification Opportunities for Citigroup and Churchill Downs
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Citigroup and Churchill is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Churchill Downs Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Churchill Downs and Citigroup 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 Citigroup are associated (or correlated) with Churchill Downs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Churchill Downs has no effect on the direction of Citigroup i.e., Citigroup and Churchill Downs go up and down completely randomly.
Pair Corralation between Citigroup and Churchill Downs
Taking into account the 90-day investment horizon Citigroup is expected to generate 0.95 times more return on investment than Churchill Downs. However, Citigroup is 1.06 times less risky than Churchill Downs. It trades about 0.08 of its potential returns per unit of risk. Churchill Downs Incorporated is currently generating about 0.04 per unit of risk. If you would invest 4,054 in Citigroup on September 12, 2024 and sell it today you would earn a total of 3,196 from holding Citigroup or generate 78.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.21% |
| Values | Daily Returns |
Citigroup vs. Churchill Downs Incorporated
Performance |
| Timeline |
| Citigroup |
| Churchill Downs |
Citigroup and Churchill Downs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Churchill Downs
The main advantage of trading using opposite Citigroup and Churchill Downs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Churchill Downs 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 Churchill Downs will offset losses from the drop in Churchill Downs' long position.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
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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 Stocks Directory module to find actively traded stocks across global markets.
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