Correlation Between Elray Resources and Churchill Downs

Can any of the company-specific risk be diversified away by investing in both Elray Resources and Churchill Downs 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 Elray Resources and Churchill Downs into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Elray Resources and Churchill Downs Incorporated, you can compare the effects of market volatilities on Elray Resources and Churchill Downs 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 Elray Resources with a short position of Churchill Downs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elray Resources and Churchill Downs.

Diversification Opportunities for Elray Resources and Churchill Downs

0.22

Correlation Coefficient

Elray Resources  Churchill Downs

Modest diversification

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

Pair Corralation between Elray Resources and Churchill Downs

Given the investment horizon of 90 days Elray Resources is expected to generate 18.14 times more return on investment than Churchill Downs. However, Elray Resources is 18.14 times more volatile than Churchill Downs Incorporated. It trades about 0.03 of its potential returns per unit of risk. Churchill Downs Incorporated is currently generating about -0.22 per unit of risk. If you would invest  0.05  in Elray Resources on September 19, 2024 and sell it today you would lose (0.01) from holding Elray Resources or give up 20.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Elray Resources  vs.  Churchill Downs Incorporated

Elray Resources

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Elray Resources are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile basic indicators, Elray Resources sustained solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Elray Resources and Churchill Downs

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

The idea behind Elray Resources and Churchill Downs Incorporated 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .