Correlation Between International Game and Churchill Downs

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

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

Diversification Opportunities for International Game and Churchill Downs

-0.15

Correlation Coefficient

International Game  Churchill Downs

Good diversification

The 3 months correlation between International and Churchill is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding International Game Technology and Churchill Downs Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Churchill Downs and International Game 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 International Game Technology 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 International Game i.e., International Game and Churchill Downs go up and down completely randomly.

Pair Corralation between International Game and Churchill Downs

Considering the 90-day investment horizon International Game Technology is expected to under-perform the Churchill Downs. But the stock apears to be less risky and, when comparing its historical volatility, International Game Technology is 1.09 times less risky than Churchill Downs. The stock trades about -0.09 of its potential returns per unit of risk. The Churchill Downs Incorporated is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  13,856  in Churchill Downs Incorporated on September 5, 2024 and sell it today you would earn a total of  170.00  from holding Churchill Downs Incorporated or generate 1.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

International Game Technology  vs.  Churchill Downs Incorporated

International Game

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days International Game Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Churchill Downs

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Churchill Downs Incorporated are ranked lower than 1 (%) 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 International Game and Churchill Downs

The main advantage of trading using opposite International Game and Churchill Downs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Game 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 International Game Technology 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.