Correlation Between Scientific Games and Churchill Downs
Can any of the company-specific risk be diversified away by investing in both Scientific Games 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 Scientific Games and Churchill Downs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Scientific Games and Churchill Downs Incorporated, you can compare the effects of market volatilities on Scientific Games 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 Scientific Games with a short position of Churchill Downs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scientific Games and Churchill Downs.
Diversification Opportunities for Scientific Games and Churchill Downs
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Scientific and Churchill is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Scientific Games and Churchill Downs Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Churchill Downs and Scientific Games 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 Scientific Games 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 Scientific Games i.e., Scientific Games and Churchill Downs go up and down completely randomly.
Pair Corralation between Scientific Games and Churchill Downs
Assuming the 90 days horizon Scientific Games is expected to generate 1.04 times less return on investment than Churchill Downs. In addition to that, Scientific Games is 1.44 times more volatile than Churchill Downs Incorporated. It trades about 0.04 of its total potential returns per unit of risk. Churchill Downs Incorporated is currently generating about 0.06 per unit of volatility. If you would invest 11,200 in Churchill Downs Incorporated on September 4, 2024 and sell it today you would earn a total of 2,400 from holding Churchill Downs Incorporated or generate 21.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Scientific Games vs. Churchill Downs Incorporated
Performance |
| Timeline |
| Scientific Games |
| Churchill Downs |
Scientific Games and Churchill Downs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scientific Games and Churchill Downs
The main advantage of trading using opposite Scientific Games and Churchill Downs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scientific Games 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.| Scientific Games vs. Apple Inc | Scientific Games vs. Apple Inc | Scientific Games vs. Apple Inc | Scientific Games vs. Apple Inc |
| 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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