Correlation Between Ally Financial and Flutter Entertainment
Can any of the company-specific risk be diversified away by investing in both Ally Financial and Flutter Entertainment 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 Ally Financial and Flutter Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ally Financial and Flutter Entertainment PLC, you can compare the effects of market volatilities on Ally Financial and Flutter Entertainment 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 Ally Financial with a short position of Flutter Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ally Financial and Flutter Entertainment.
Diversification Opportunities for Ally Financial and Flutter Entertainment
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Ally and Flutter is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Ally Financial and Flutter Entertainment PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flutter Entertainment PLC and Ally Financial 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 Ally Financial are associated (or correlated) with Flutter Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flutter Entertainment PLC has no effect on the direction of Ally Financial i.e., Ally Financial and Flutter Entertainment go up and down completely randomly.
Pair Corralation between Ally Financial and Flutter Entertainment
Assuming the 90 days trading horizon Ally Financial is expected to generate 1.29 times less return on investment than Flutter Entertainment. In addition to that, Ally Financial is 1.02 times more volatile than Flutter Entertainment PLC. It trades about 0.29 of its total potential returns per unit of risk. Flutter Entertainment PLC is currently generating about 0.38 per unit of volatility. If you would invest 1,814,000 in Flutter Entertainment PLC on September 1, 2024 and sell it today you would earn a total of 347,000 from holding Flutter Entertainment PLC or generate 19.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ally Financial vs. Flutter Entertainment PLC
Performance |
| Timeline |
| Ally Financial |
| Flutter Entertainment PLC |
Ally Financial and Flutter Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ally Financial and Flutter Entertainment
The main advantage of trading using opposite Ally Financial and Flutter Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ally Financial position performs unexpectedly, Flutter Entertainment 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 Flutter Entertainment will offset losses from the drop in Flutter Entertainment's long position.| Ally Financial vs. Uniper SE | Ally Financial vs. Mulberry Group PLC | Ally Financial vs. London Security Plc | Ally Financial vs. Triad Group PLC |
| Flutter Entertainment vs. Viridian Therapeutics | Flutter Entertainment vs. CVR Energy | Flutter Entertainment vs. Nationwide Building Society | Flutter Entertainment vs. Dollar Tree |
Check out your portfolio center.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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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