Correlation Between Churchill Downs and Lion One
Can any of the company-specific risk be diversified away by investing in both Churchill Downs and Lion One 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 Lion One 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 Lion One Metals, you can compare the effects of market volatilities on Churchill Downs and Lion One 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 Lion One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Churchill Downs and Lion One.
Diversification Opportunities for Churchill Downs and Lion One
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Churchill and Lion is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Churchill Downs Incorporated and Lion One Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lion One Metals 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 Lion One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lion One Metals has no effect on the direction of Churchill Downs i.e., Churchill Downs and Lion One go up and down completely randomly.
Pair Corralation between Churchill Downs and Lion One
Assuming the 90 days horizon Churchill Downs Incorporated is expected to generate 0.4 times more return on investment than Lion One. However, Churchill Downs Incorporated is 2.51 times less risky than Lion One. It trades about 0.03 of its potential returns per unit of risk. Lion One Metals is currently generating about -0.03 per unit of risk. If you would invest 10,462 in Churchill Downs Incorporated on September 3, 2024 and sell it today you would earn a total of 2,738 from holding Churchill Downs Incorporated or generate 26.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Churchill Downs Incorporated vs. Lion One Metals
Performance |
| Timeline |
| Churchill Downs |
| Lion One Metals |
Churchill Downs and Lion One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Churchill Downs and Lion One
The main advantage of trading using opposite Churchill Downs and Lion One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Churchill Downs position performs unexpectedly, Lion One 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 Lion One will offset losses from the drop in Lion One's long position.| Churchill Downs vs. Lion One Metals | Churchill Downs vs. Eastman Chemical | Churchill Downs vs. FIREWEED METALS P | Churchill Downs vs. China BlueChemical |
| Lion One vs. Cars Inc | Lion One vs. Chunghwa Telecom Co | Lion One vs. United Internet AG | Lion One vs. JAPAN TOBACCO UNSPADR12 |
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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