Correlation Between Brinker International and Churchill Downs
Can any of the company-specific risk be diversified away by investing in both Brinker International 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 Brinker International and Churchill Downs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brinker International and Churchill Downs Incorporated, you can compare the effects of market volatilities on Brinker International 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 Brinker International with a short position of Churchill Downs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brinker International and Churchill Downs.
Diversification Opportunities for Brinker International and Churchill Downs
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Brinker and Churchill is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Brinker International and Churchill Downs Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Churchill Downs and Brinker International 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 Brinker International 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 Brinker International i.e., Brinker International and Churchill Downs go up and down completely randomly.
Pair Corralation between Brinker International and Churchill Downs
Considering the 90-day investment horizon Brinker International is expected to generate 2.01 times more return on investment than Churchill Downs. However, Brinker International is 2.01 times more volatile than Churchill Downs Incorporated. It trades about 0.34 of its potential returns per unit of risk. Churchill Downs Incorporated is currently generating about -0.05 per unit of risk. If you would invest 7,121 in Brinker International on November 2, 2024 and sell it today you would earn a total of 11,129 from holding Brinker International or generate 156.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brinker International vs. Churchill Downs Incorporated
Performance |
| Timeline |
| Brinker International |
| Churchill Downs |
Brinker International and Churchill Downs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brinker International and Churchill Downs
The main advantage of trading using opposite Brinker International and Churchill Downs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brinker International 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.| Brinker International vs. Dennys Corp | Brinker International vs. Bloomin Brands | Brinker International vs. Jack In The | Brinker International vs. Dine Brands Global |
| Churchill Downs vs. Accel Entertainment | Churchill Downs vs. PlayAGS | Churchill Downs vs. International Game Technology | Churchill Downs vs. Everi Holdings |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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