Correlation Between Dow Jones and Churchill Downs
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Churchill Downs 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 Dow Jones and Churchill Downs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and Churchill Downs Incorporated, you can compare the effects of market volatilities on Dow Jones and Churchill Downs 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 Dow Jones with a short position of Churchill Downs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Churchill Downs.
Diversification Opportunities for Dow Jones and Churchill Downs
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dow and Churchill is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Churchill Downs Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Churchill Downs and Dow Jones 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 Dow Jones Industrial are associated (or correlated) with Churchill Downs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Churchill Downs has no effect on the direction of Dow Jones i.e., Dow Jones and Churchill Downs go up and down completely randomly.
Pair Corralation between Dow Jones and Churchill Downs
Assuming the 90 days trading horizon Dow Jones is expected to generate 1.22 times less return on investment than Churchill Downs. But when comparing it to its historical volatility, Dow Jones Industrial is 2.42 times less risky than Churchill Downs. It trades about 0.09 of its potential returns per unit of risk. Churchill Downs Incorporated is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 9,635 in Churchill Downs Incorporated on September 12, 2024 and sell it today you would earn a total of 3,465 from holding Churchill Downs Incorporated or generate 35.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.02% |
| Values | Daily Returns |
Dow Jones Industrial vs. Churchill Downs Incorporated
Performance |
| Timeline |
Dow Jones and Churchill Downs Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Churchill Downs Incorporated
Pair trading matchups for Churchill Downs
Pair Trading with Dow Jones and Churchill Downs
The main advantage of trading using opposite Dow Jones and Churchill Downs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Churchill Downs 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 Churchill Downs will offset losses from the drop in Churchill Downs' long position.| Dow Jones vs. Aeye Inc | Dow Jones vs. Gentex | Dow Jones vs. Marine Products | Dow Jones vs. CarsalesCom Ltd ADR |
| Churchill Downs vs. Scientific Games | Churchill Downs vs. International Game Technology | Churchill Downs vs. Superior Plus Corp | Churchill Downs 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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