Correlation Between Churchill Downs and Flutter Entertainment
Can any of the company-specific risk be diversified away by investing in both Churchill Downs and Flutter Entertainment 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 Flutter Entertainment 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 Flutter Entertainment PLC, you can compare the effects of market volatilities on Churchill Downs and Flutter Entertainment 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 Flutter Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Churchill Downs and Flutter Entertainment.
Diversification Opportunities for Churchill Downs and Flutter Entertainment
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Churchill and Flutter is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Churchill Downs Incorporated and Flutter Entertainment PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flutter Entertainment 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 Flutter Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flutter Entertainment PLC has no effect on the direction of Churchill Downs i.e., Churchill Downs and Flutter Entertainment go up and down completely randomly.
Pair Corralation between Churchill Downs and Flutter Entertainment
Assuming the 90 days trading horizon Churchill Downs is expected to generate 2.92 times less return on investment than Flutter Entertainment. But when comparing it to its historical volatility, Churchill Downs Incorporated is 1.32 times less risky than Flutter Entertainment. It trades about 0.19 of its potential returns per unit of risk. Flutter Entertainment PLC is currently generating about 0.41 of returns per unit of risk over similar time horizon. If you would invest 21,030 in Flutter Entertainment PLC on September 4, 2024 and sell it today you would earn a total of 5,360 from holding Flutter Entertainment PLC or generate 25.49% 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. Flutter Entertainment PLC
Performance |
| Timeline |
| Churchill Downs |
| Flutter Entertainment PLC |
Churchill Downs and Flutter Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Churchill Downs and Flutter Entertainment
The main advantage of trading using opposite Churchill Downs and Flutter Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Churchill Downs position performs unexpectedly, Flutter Entertainment 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 Flutter Entertainment will offset losses from the drop in Flutter Entertainment's long position.| Churchill Downs vs. Flutter Entertainment PLC | Churchill Downs vs. Evolution AB | Churchill Downs vs. Churchill Downs Incorporated | Churchill Downs vs. Scientific Games |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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