Correlation Between Churchill Downs and Kambi Group
Can any of the company-specific risk be diversified away by investing in both Churchill Downs and Kambi 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 Churchill Downs and Kambi Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Churchill Downs Incorporated and Kambi Group plc, you can compare the effects of market volatilities on Churchill Downs and Kambi 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 Churchill Downs with a short position of Kambi Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Churchill Downs and Kambi Group.
Diversification Opportunities for Churchill Downs and Kambi Group
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Churchill and Kambi is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Churchill Downs Incorporated and Kambi Group plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kambi Group plc and Churchill Downs 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 Churchill Downs Incorporated are associated (or correlated) with Kambi Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kambi Group plc has no effect on the direction of Churchill Downs i.e., Churchill Downs and Kambi Group go up and down completely randomly.
Pair Corralation between Churchill Downs and Kambi Group
Given the investment horizon of 90 days Churchill Downs Incorporated is expected to generate 0.58 times more return on investment than Kambi Group. However, Churchill Downs Incorporated is 1.72 times less risky than Kambi Group. It trades about 0.01 of its potential returns per unit of risk. Kambi Group plc is currently generating about -0.03 per unit of risk. If you would invest 12,163 in Churchill Downs Incorporated on November 2, 2024 and sell it today you would earn a total of 394.00 from holding Churchill Downs Incorporated or generate 3.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Churchill Downs Incorporated vs. Kambi Group plc
Performance |
| Timeline |
| Churchill Downs |
| Kambi Group plc |
Churchill Downs and Kambi Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Churchill Downs and Kambi Group
The main advantage of trading using opposite Churchill Downs and Kambi Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Churchill Downs position performs unexpectedly, Kambi 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 Kambi Group will offset losses from the drop in Kambi Group's long position.| Churchill Downs vs. Accel Entertainment | Churchill Downs vs. PlayAGS | Churchill Downs vs. International Game Technology | Churchill Downs vs. Everi Holdings |
| Kambi Group vs. Light Wonder | Kambi Group vs. Everi Holdings | Kambi Group vs. PlayAGS | Kambi Group vs. Accel Entertainment |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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