Correlation Between Churchill Downs and INTUITIVE SURGICAL

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

Diversification Opportunities for Churchill Downs and INTUITIVE SURGICAL

0.82

Correlation Coefficient

Churchill Downs  INTUITIVE SURGICAL

Very poor diversification

The 3 months correlation between Churchill and INTUITIVE is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Churchill Downs Incorporated and INTUITIVE SURGICAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INTUITIVE SURGICAL 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 INTUITIVE SURGICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INTUITIVE SURGICAL has no effect on the direction of Churchill Downs i.e., Churchill Downs and INTUITIVE SURGICAL go up and down completely randomly.

Pair Corralation between Churchill Downs and INTUITIVE SURGICAL

Assuming the 90 days horizon Churchill Downs is expected to generate 2.25 times less return on investment than INTUITIVE SURGICAL. In addition to that, Churchill Downs is 1.04 times more volatile than INTUITIVE SURGICAL. It trades about 0.09 of its total potential returns per unit of risk. INTUITIVE SURGICAL is currently generating about 0.21 per unit of volatility. If you would invest  43,345  in INTUITIVE SURGICAL on September 4, 2024 and sell it today you would earn a total of  7,875  from holding INTUITIVE SURGICAL or generate 18.17% return on investment over 90 days.

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

Churchill Downs Incorporated  vs.  INTUITIVE SURGICAL

Churchill Downs

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Churchill Downs Incorporated are ranked lower than 7 (%) 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.

INTUITIVE SURGICAL

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in INTUITIVE SURGICAL are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile technical and fundamental indicators, INTUITIVE SURGICAL exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Churchill Downs and INTUITIVE SURGICAL

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

The idea behind Churchill Downs Incorporated and INTUITIVE SURGICAL 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..