Correlation Between Churchill Downs and Gambling

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

Diversification Opportunities for Churchill Downs and Gambling

-0.63

Correlation Coefficient

Churchill Downs  Gambling

Excellent diversification

The 3 months correlation between Churchill and Gambling is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Churchill Downs Incorporated and Gambling Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gambling Group 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 Gambling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gambling Group has no effect on the direction of Churchill Downs i.e., Churchill Downs and Gambling go up and down completely randomly.

Pair Corralation between Churchill Downs and Gambling

Given the investment horizon of 90 days Churchill Downs Incorporated is expected to generate 0.79 times more return on investment than Gambling. However, Churchill Downs Incorporated is 1.27 times less risky than Gambling. It trades about 0.09 of its potential returns per unit of risk. Gambling Group is currently generating about -0.35 per unit of risk. If you would invest  10,349  in Churchill Downs Incorporated on May 6, 2025 and sell it today you would earn a total of  290.00  from holding Churchill Downs Incorporated or generate 2.8% return on investment over 90 days.

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

Churchill Downs Incorporated  vs.  Gambling Group

Churchill Downs

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Churchill Downs Incorporated are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting fundamental indicators, Churchill Downs displayed solid returns over the last few months and may actually be approaching a breakup point.

Gambling Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gambling Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's primary indicators remain somewhat strong which may send shares a bit higher in September 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Churchill Downs and Gambling

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

The idea behind Churchill Downs Incorporated and Gambling Group 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.