Correlation Between Churchill Downs and Gan

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

Diversification Opportunities for Churchill Downs and Gan

0.22

Correlation Coefficient

Churchill Downs  Gan

Modest diversification

The 3 months correlation between Churchill and Gan is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Churchill Downs Incorporated and Gan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gan 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 Gan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gan has no effect on the direction of Churchill Downs i.e., Churchill Downs and Gan go up and down completely randomly.

Pair Corralation between Churchill Downs and Gan

Given the investment horizon of 90 days Churchill Downs is expected to generate 3.05 times less return on investment than Gan. But when comparing it to its historical volatility, Churchill Downs Incorporated is 3.24 times less risky than Gan. It trades about 0.03 of its potential returns per unit of risk. Gan is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  142.00  in Gan on September 19, 2024 and sell it today you would earn a total of  40.00  from holding Gan or generate 28.17% 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.  Gan

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 latest uncertain performance, the Stock's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Gan

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Gan are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Gan is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Churchill Downs and Gan

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

The idea behind Churchill Downs Incorporated and Gan 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.

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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.