Correlation Between Flutter Entertainment and American Homes
Can any of the company-specific risk be diversified away by investing in both Flutter Entertainment and American Homes 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 Flutter Entertainment and American Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Flutter Entertainment PLC and American Homes 4, you can compare the effects of market volatilities on Flutter Entertainment and American Homes 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 Flutter Entertainment with a short position of American Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flutter Entertainment and American Homes.
Diversification Opportunities for Flutter Entertainment and American Homes
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Flutter and American is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Flutter Entertainment PLC and American Homes 4 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Homes 4 and Flutter Entertainment 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 Flutter Entertainment PLC are associated (or correlated) with American Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Homes 4 has no effect on the direction of Flutter Entertainment i.e., Flutter Entertainment and American Homes go up and down completely randomly.
Pair Corralation between Flutter Entertainment and American Homes
Assuming the 90 days trading horizon Flutter Entertainment PLC is expected to generate 1.46 times more return on investment than American Homes. However, Flutter Entertainment is 1.46 times more volatile than American Homes 4. It trades about 0.07 of its potential returns per unit of risk. American Homes 4 is currently generating about 0.05 per unit of risk. If you would invest 1,197,000 in Flutter Entertainment PLC on August 30, 2024 and sell it today you would earn a total of 968,000 from holding Flutter Entertainment PLC or generate 80.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 83.3% |
| Values | Daily Returns |
Flutter Entertainment PLC vs. American Homes 4
Performance |
| Timeline |
| Flutter Entertainment PLC |
| American Homes 4 |
Flutter Entertainment and American Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Flutter Entertainment and American Homes
The main advantage of trading using opposite Flutter Entertainment and American Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flutter Entertainment position performs unexpectedly, American Homes 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 American Homes will offset losses from the drop in American Homes' long position.| Flutter Entertainment vs. Ondine Biomedical | Flutter Entertainment vs. Europa Metals | Flutter Entertainment vs. Lendinvest PLC | Flutter Entertainment vs. Neometals |
| American Homes vs. Lendinvest PLC | American Homes vs. Neometals | American Homes vs. Albion Technology General | American Homes vs. Jupiter Fund Management |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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