Correlation Between Steel Dynamics and Churchill Downs
Can any of the company-specific risk be diversified away by investing in both Steel Dynamics 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 Steel Dynamics and Churchill Downs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Steel Dynamics and Churchill Downs Incorporated, you can compare the effects of market volatilities on Steel Dynamics 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 Steel Dynamics with a short position of Churchill Downs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steel Dynamics and Churchill Downs.
Diversification Opportunities for Steel Dynamics and Churchill Downs
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Steel and Churchill is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Steel Dynamics and Churchill Downs Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Churchill Downs and Steel Dynamics 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 Steel Dynamics 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 Steel Dynamics i.e., Steel Dynamics and Churchill Downs go up and down completely randomly.
Pair Corralation between Steel Dynamics and Churchill Downs
Given the investment horizon of 90 days Steel Dynamics is expected to generate 1.36 times more return on investment than Churchill Downs. However, Steel Dynamics is 1.36 times more volatile than Churchill Downs Incorporated. It trades about -0.02 of its potential returns per unit of risk. Churchill Downs Incorporated is currently generating about -0.16 per unit of risk. If you would invest 12,444 in Steel Dynamics on January 14, 2025 and sell it today you would lose (403.00) from holding Steel Dynamics or give up 3.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Steel Dynamics vs. Churchill Downs Incorporated
Performance |
| Timeline |
| Steel Dynamics |
| Churchill Downs |
Steel Dynamics and Churchill Downs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steel Dynamics and Churchill Downs
The main advantage of trading using opposite Steel Dynamics and Churchill Downs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steel Dynamics 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.| Steel Dynamics vs. Cleveland Cliffs | Steel Dynamics vs. United States Steel | Steel Dynamics vs. ArcelorMittal SA ADR | Steel Dynamics vs. Reliance Steel Aluminum |
| Churchill Downs vs. Flutter Entertainment PLC | Churchill Downs vs. Evolution AB | Churchill Downs vs. Churchill Downs Incorporated | Churchill Downs vs. La Franaise des |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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