Correlation Between Churchill Downs and Scientific Games
Can any of the company-specific risk be diversified away by investing in both Churchill Downs and Scientific Games 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 Scientific Games 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 Scientific Games, you can compare the effects of market volatilities on Churchill Downs and Scientific Games 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 Scientific Games. Check out your portfolio center. Please also check ongoing floating volatility patterns of Churchill Downs and Scientific Games.
Diversification Opportunities for Churchill Downs and Scientific Games
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Churchill and Scientific is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Churchill Downs Incorporated and Scientific Games in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scientific Games 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 Scientific Games. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scientific Games has no effect on the direction of Churchill Downs i.e., Churchill Downs and Scientific Games go up and down completely randomly.
Pair Corralation between Churchill Downs and Scientific Games
Assuming the 90 days trading horizon Churchill Downs is expected to generate 1.24 times less return on investment than Scientific Games. But when comparing it to its historical volatility, Churchill Downs Incorporated is 1.53 times less risky than Scientific Games. It trades about 0.14 of its potential returns per unit of risk. Scientific Games is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 8,550 in Scientific Games on September 3, 2024 and sell it today you would earn a total of 550.00 from holding Scientific Games or generate 6.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Churchill Downs Incorporated vs. Scientific Games
Performance |
| Timeline |
| Churchill Downs |
| Scientific Games |
Churchill Downs and Scientific Games Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Churchill Downs and Scientific Games
The main advantage of trading using opposite Churchill Downs and Scientific Games positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Churchill Downs position performs unexpectedly, Scientific Games 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 Scientific Games will offset losses from the drop in Scientific Games' long position.| Churchill Downs vs. CEOTRONICS | Churchill Downs vs. Media and Games | Churchill Downs vs. AWILCO DRILLING PLC | Churchill Downs vs. BJs Restaurants |
| Scientific Games vs. Apple Inc | Scientific Games vs. Apple Inc | Scientific Games vs. Apple Inc | Scientific Games vs. Apple Inc |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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