Correlation Between Everi Holdings and Churchill Downs

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

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

Diversification Opportunities for Everi Holdings and Churchill Downs

0.47

Correlation Coefficient

Everi Holdings  Churchill Downs

Very weak diversification

The 3 months correlation between Everi and Churchill is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Everi Holdings and Churchill Downs Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Churchill Downs and Everi Holdings 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 Everi Holdings 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 Everi Holdings i.e., Everi Holdings and Churchill Downs go up and down completely randomly.

Pair Corralation between Everi Holdings and Churchill Downs

Given the investment horizon of 90 days Everi Holdings is expected to generate 1.86 times less return on investment than Churchill Downs. But when comparing it to its historical volatility, Everi Holdings is 9.55 times less risky than Churchill Downs. It trades about 0.31 of its potential returns per unit of risk. Churchill Downs Incorporated is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  13,753  in Churchill Downs Incorporated on September 4, 2024 and sell it today you would earn a total of  525.00  from holding Churchill Downs Incorporated or generate 3.82% return on investment over 90 days.

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

Everi Holdings  vs.  Churchill Downs Incorporated

Everi Holdings

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Everi Holdings are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Everi Holdings is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Churchill Downs

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Churchill Downs Incorporated are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. 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 Everi Holdings and Churchill Downs

The main advantage of trading using opposite Everi Holdings and Churchill Downs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Everi Holdings 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 Everi Holdings 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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.