Correlation Between Churchill Downs and Western Copper
Can any of the company-specific risk be diversified away by investing in both Churchill Downs and Western Copper 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 Western Copper 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 Western Copper and, you can compare the effects of market volatilities on Churchill Downs and Western Copper 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 Western Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Churchill Downs and Western Copper.
Diversification Opportunities for Churchill Downs and Western Copper
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Churchill and Western is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Churchill Downs Incorporated and Western Copper and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Copper 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 Western Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Copper has no effect on the direction of Churchill Downs i.e., Churchill Downs and Western Copper go up and down completely randomly.
Pair Corralation between Churchill Downs and Western Copper
Assuming the 90 days trading horizon Churchill Downs Incorporated is expected to generate 0.58 times more return on investment than Western Copper. However, Churchill Downs Incorporated is 1.73 times less risky than Western Copper. It trades about 0.04 of its potential returns per unit of risk. Western Copper and is currently generating about -0.02 per unit of risk. If you would invest 9,684 in Churchill Downs Incorporated on September 14, 2024 and sell it today you would earn a total of 3,416 from holding Churchill Downs Incorporated or generate 35.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Churchill Downs Incorporated vs. Western Copper and
Performance |
| Timeline |
| Churchill Downs |
| Western Copper |
Churchill Downs and Western Copper Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Churchill Downs and Western Copper
The main advantage of trading using opposite Churchill Downs and Western Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Churchill Downs position performs unexpectedly, Western Copper 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 Western Copper will offset losses from the drop in Western Copper's long position.| Churchill Downs vs. Western Copper and | Churchill Downs vs. National Beverage Corp | Churchill Downs vs. Cal Maine Foods | Churchill Downs vs. COFCO Joycome Foods |
| Western Copper vs. BHP Group Limited | Western Copper vs. Vale SA | Western Copper vs. Superior Plus Corp | Western Copper vs. SIVERS SEMICONDUCTORS AB |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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