Correlation Between Churchill Downs and Codere Online

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

Diversification Opportunities for Churchill Downs and Codere Online

0.35

Correlation Coefficient

Churchill Downs  Codere Online

Weak diversification

The 3 months correlation between Churchill and Codere is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Churchill Downs Incorporated and Codere Online Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Codere Online Corp 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 Codere Online. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Codere Online Corp has no effect on the direction of Churchill Downs i.e., Churchill Downs and Codere Online go up and down completely randomly.

Pair Corralation between Churchill Downs and Codere Online

Given the investment horizon of 90 days Churchill Downs is expected to generate 7.21 times less return on investment than Codere Online. But when comparing it to its historical volatility, Churchill Downs Incorporated is 2.21 times less risky than Codere Online. It trades about 0.02 of its potential returns per unit of risk. Codere Online Corp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  267.00  in Codere Online Corp on October 5, 2024 and sell it today you would earn a total of  419.00  from holding Codere Online Corp or generate 156.93% 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.  Codere Online Corp

Churchill Downs

Risk-Adjusted Performance

0 of 100

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 very healthy fundamental indicators, Churchill Downs is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Codere Online Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Churchill Downs and Codere Online

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

The idea behind Churchill Downs Incorporated and Codere Online Corp 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.