Correlation Between Churchill Downs and Accel Entertainment

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

Diversification Opportunities for Churchill Downs and Accel Entertainment

0.26

Correlation Coefficient

Churchill Downs  Accel Entertainment

Modest diversification

The 3 months correlation between Churchill and Accel is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Churchill Downs Incorporated and Accel Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Accel Entertainment 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 Accel Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Accel Entertainment has no effect on the direction of Churchill Downs i.e., Churchill Downs and Accel Entertainment go up and down completely randomly.

Pair Corralation between Churchill Downs and Accel Entertainment

Given the investment horizon of 90 days Churchill Downs Incorporated is expected to under-perform the Accel Entertainment. But the stock apears to be less risky and, when comparing its historical volatility, Churchill Downs Incorporated is 1.52 times less risky than Accel Entertainment. The stock trades about -0.23 of its potential returns per unit of risk. The Accel Entertainment is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  1,057  in Accel Entertainment on December 29, 2024 and sell it today you would lose (60.00) from holding Accel Entertainment or give up 5.68% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Churchill Downs Incorporated  vs.  Accel Entertainment

Churchill Downs

Risk-Adjusted Performance

Very Weak

Over the last 90 days Churchill Downs Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Accel Entertainment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Accel Entertainment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical and fundamental indicators, Accel Entertainment is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Churchill Downs and Accel Entertainment

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

The idea behind Churchill Downs Incorporated and Accel Entertainment 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.