Correlation Between Churchill Downs and Group 1

Can any of the company-specific risk be diversified away by investing in both Churchill Downs and Group 1 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 Group 1 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 Group 1 Automotive, you can compare the effects of market volatilities on Churchill Downs and Group 1 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 Group 1. Check out your portfolio center. Please also check ongoing floating volatility patterns of Churchill Downs and Group 1.

Diversification Opportunities for Churchill Downs and Group 1

0.18

Correlation Coefficient

Churchill Downs  Group 1

Average diversification

The 3 months correlation between Churchill and Group is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Churchill Downs Incorporated and Group 1 Automotive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Group 1 Automotive 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 Group 1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Group 1 Automotive has no effect on the direction of Churchill Downs i.e., Churchill Downs and Group 1 go up and down completely randomly.

Pair Corralation between Churchill Downs and Group 1

Given the investment horizon of 90 days Churchill Downs Incorporated is expected to under-perform the Group 1. But the stock apears to be less risky and, when comparing its historical volatility, Churchill Downs Incorporated is 1.08 times less risky than Group 1. The stock trades about -0.03 of its potential returns per unit of risk. The Group 1 Automotive is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  40,698  in Group 1 Automotive on August 4, 2025 and sell it today you would lose (944.00) from holding Group 1 Automotive or give up 2.32% of portfolio value over 90 days.

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

Churchill Downs Incorporated  vs.  Group 1 Automotive

Churchill Downs

Risk-Adjusted Performance

Weakest

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 latest stock price disarray, may contribute to short-term losses for the investors.

Group 1 Automotive

Risk-Adjusted Performance

Weakest

Over the last 90 days Group 1 Automotive has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Group 1 is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Churchill Downs and Group 1

The main advantage of trading using opposite Churchill Downs and Group 1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Churchill Downs position performs unexpectedly, Group 1 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 Group 1 will offset losses from the drop in Group 1's long position.

The idea behind Churchill Downs Incorporated and Group 1 Automotive 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.