Correlation Between Churchill and Old Republic

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

By analyzing existing cross correlation between Churchill Downs 55 and Old Republic International, you can compare the effects of market volatilities on Churchill and Old Republic 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 with a short position of Old Republic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Churchill and Old Republic.

Diversification Opportunities for Churchill and Old Republic

-0.09

Correlation Coefficient

Churchill  Old Republic

Good diversification

The 3 months correlation between Churchill and Old is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Churchill Downs 55 and Old Republic International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Old Republic Interna and Churchill 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 55 are associated (or correlated) with Old Republic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Old Republic Interna has no effect on the direction of Churchill i.e., Churchill and Old Republic go up and down completely randomly.

Pair Corralation between Churchill and Old Republic

Assuming the 90 days trading horizon Churchill is expected to generate 15.48 times less return on investment than Old Republic. But when comparing it to its historical volatility, Churchill Downs 55 is 2.2 times less risky than Old Republic. It trades about 0.03 of its potential returns per unit of risk. Old Republic International is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  3,384  in Old Republic International on December 30, 2024 and sell it today you would earn a total of  511.00  from holding Old Republic International or generate 15.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	90.32%
Values	Daily Returns

Churchill Downs 55  vs.  Old Republic International

Churchill Downs 55

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Churchill Downs 55 are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Churchill is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Old Republic Interna

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Old Republic International are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, Old Republic demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Churchill and Old Republic

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

The idea behind Churchill Downs 55 and Old Republic International 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.