Correlation Between Churchill Downs and Jackpot Digital

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

Diversification Opportunities for Churchill Downs and Jackpot Digital

-0.07

Correlation Coefficient

Churchill Downs  Jackpot Digital

Good diversification

The 3 months correlation between Churchill and Jackpot is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Churchill Downs Incorporated and Jackpot Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jackpot Digital 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 Jackpot Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jackpot Digital has no effect on the direction of Churchill Downs i.e., Churchill Downs and Jackpot Digital go up and down completely randomly.

Pair Corralation between Churchill Downs and Jackpot Digital

Given the investment horizon of 90 days Churchill Downs Incorporated is expected to under-perform the Jackpot Digital. But the stock apears to be less risky and, when comparing its historical volatility, Churchill Downs Incorporated is 5.57 times less risky than Jackpot Digital. The stock trades about -0.23 of its potential returns per unit of risk. The Jackpot Digital is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  4.59  in Jackpot Digital on December 30, 2024 and sell it today you would earn a total of  0.80  from holding Jackpot Digital or generate 17.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Churchill Downs Incorporated  vs.  Jackpot Digital

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.

Jackpot Digital

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Jackpot Digital are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Jackpot Digital reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Churchill Downs and Jackpot Digital

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

The idea behind Churchill Downs Incorporated and Jackpot Digital 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.