Correlation Between Churchill Downs and TANGIAMO TOUCH

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

Diversification Opportunities for Churchill Downs and TANGIAMO TOUCH

-0.12

Correlation Coefficient

Churchill Downs  TANGIAMO TOUCH

Good diversification

The 3 months correlation between Churchill and TANGIAMO is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Churchill Downs Incorporated and TANGIAMO TOUCH TECHN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TANGIAMO TOUCH TECHN 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 TANGIAMO TOUCH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TANGIAMO TOUCH TECHN has no effect on the direction of Churchill Downs i.e., Churchill Downs and TANGIAMO TOUCH go up and down completely randomly.

Pair Corralation between Churchill Downs and TANGIAMO TOUCH

Assuming the 90 days horizon Churchill Downs Incorporated is expected to generate 0.13 times more return on investment than TANGIAMO TOUCH. However, Churchill Downs Incorporated is 7.41 times less risky than TANGIAMO TOUCH. It trades about -0.25 of its potential returns per unit of risk. TANGIAMO TOUCH TECHN is currently generating about -0.18 per unit of risk. If you would invest  13,459  in Churchill Downs Incorporated on September 25, 2024 and sell it today you would lose (859.00) from holding Churchill Downs Incorporated or give up 6.38% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Churchill Downs Incorporated  vs.  TANGIAMO TOUCH TECHN

Churchill Downs

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Churchill Downs Incorporated are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Churchill Downs may actually be approaching a critical reversion point that can send shares even higher in January 2025.

TANGIAMO TOUCH TECHN

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in TANGIAMO TOUCH TECHN are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, TANGIAMO TOUCH reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Churchill Downs and TANGIAMO TOUCH

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

The idea behind Churchill Downs Incorporated and TANGIAMO TOUCH TECHN 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.