Correlation Between Churchill Downs and Neogames

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

Diversification Opportunities for Churchill Downs and Neogames

0.27

Correlation Coefficient

Churchill Downs  Neogames

Modest diversification

The 3 months correlation between Churchill and Neogames is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Churchill Downs Incorporated and Neogames SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neogames SA 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 Neogames. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neogames SA has no effect on the direction of Churchill Downs i.e., Churchill Downs and Neogames go up and down completely randomly.

Pair Corralation between Churchill Downs and Neogames

If you would invest  13,559  in Churchill Downs Incorporated on August 14, 2024 and sell it today you would earn a total of  629.00  from holding Churchill Downs Incorporated or generate 4.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	1.59%
Values	Daily Returns

Churchill Downs Incorporated  vs.  Neogames SA

Churchill Downs

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Churchill Downs Incorporated are ranked lower than 4 (%) 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.

Neogames SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Neogames SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable primary indicators, Neogames is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Churchill Downs and Neogames

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

The idea behind Churchill Downs Incorporated and Neogames SA 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.