Correlation Between Churchill Downs and La Franaise

Can any of the company-specific risk be diversified away by investing in both Churchill Downs and La Franaise 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 La Franaise 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 La Franaise des, you can compare the effects of market volatilities on Churchill Downs and La Franaise 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 La Franaise. Check out your portfolio center. Please also check ongoing floating volatility patterns of Churchill Downs and La Franaise.

Diversification Opportunities for Churchill Downs and La Franaise

0.37

Correlation Coefficient

Churchill Downs  La Franaise

Weak diversification

The 3 months correlation between Churchill and 1WE is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Churchill Downs Incorporated and La Franaise des in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on La Franaise des 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 La Franaise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of La Franaise des has no effect on the direction of Churchill Downs i.e., Churchill Downs and La Franaise go up and down completely randomly.

Pair Corralation between Churchill Downs and La Franaise

Assuming the 90 days horizon Churchill Downs Incorporated is expected to generate 1.01 times more return on investment than La Franaise. However, Churchill Downs is 1.01 times more volatile than La Franaise des. It trades about 0.02 of its potential returns per unit of risk. La Franaise des is currently generating about -0.02 per unit of risk. If you would invest  12,163  in Churchill Downs Incorporated on September 22, 2024 and sell it today you would earn a total of  237.00  from holding Churchill Downs Incorporated or generate 1.95% 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.  La Franaise des

Churchill Downs

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Churchill Downs Incorporated are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Churchill Downs is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

La Franaise des

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days La Franaise des has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, La Franaise is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Churchill Downs and La Franaise

The main advantage of trading using opposite Churchill Downs and La Franaise positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Churchill Downs position performs unexpectedly, La Franaise 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 La Franaise will offset losses from the drop in La Franaise's long position.

The idea behind Churchill Downs Incorporated and La Franaise des pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Transaction History module to view history of all your transactions and understand their impact on performance.