Correlation Between Designer Brands and Flutter Entertainment
Can any of the company-specific risk be diversified away by investing in both Designer Brands 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 Designer Brands and Flutter Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Designer Brands and Flutter Entertainment plc, you can compare the effects of market volatilities on Designer Brands 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 Designer Brands with a short position of Flutter Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Designer Brands and Flutter Entertainment.
Diversification Opportunities for Designer Brands and Flutter Entertainment
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Designer and Flutter is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Designer Brands 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 Designer Brands 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 Designer Brands 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 Designer Brands i.e., Designer Brands and Flutter Entertainment go up and down completely randomly.
Pair Corralation between Designer Brands and Flutter Entertainment
Considering the 90-day investment horizon Designer Brands is expected to generate 1.85 times more return on investment than Flutter Entertainment. However, Designer Brands is 1.85 times more volatile than Flutter Entertainment plc. It trades about 0.07 of its potential returns per unit of risk. Flutter Entertainment plc is currently generating about -0.24 per unit of risk. If you would invest 371.00 in Designer Brands on January 2, 2025 and sell it today you would earn a total of 19.00 from holding Designer Brands or generate 5.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Designer Brands vs. Flutter Entertainment plc
Performance |
| Timeline |
| Designer Brands |
| Flutter Entertainment plc |
Designer Brands and Flutter Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Designer Brands and Flutter Entertainment
The main advantage of trading using opposite Designer Brands and Flutter Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Designer Brands 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.| Designer Brands vs. Wolverine World Wide | ||
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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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