Correlation Between Flutter Entertainment and Naked Wines
Can any of the company-specific risk be diversified away by investing in both Flutter Entertainment and Naked Wines 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 Naked Wines 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 Naked Wines plc, you can compare the effects of market volatilities on Flutter Entertainment and Naked Wines 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 Naked Wines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flutter Entertainment and Naked Wines.
Diversification Opportunities for Flutter Entertainment and Naked Wines
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Flutter and Naked is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Flutter Entertainment PLC and Naked Wines plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Naked Wines plc 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 Naked Wines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Naked Wines plc has no effect on the direction of Flutter Entertainment i.e., Flutter Entertainment and Naked Wines go up and down completely randomly.
Pair Corralation between Flutter Entertainment and Naked Wines
Assuming the 90 days trading horizon Flutter Entertainment is expected to generate 4.55 times less return on investment than Naked Wines. But when comparing it to its historical volatility, Flutter Entertainment PLC is 2.68 times less risky than Naked Wines. It trades about 0.13 of its potential returns per unit of risk. Naked Wines plc is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 4,560 in Naked Wines plc on November 3, 2024 and sell it today you would earn a total of 940.00 from holding Naked Wines plc or generate 20.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Flutter Entertainment PLC vs. Naked Wines plc
Performance |
| Timeline |
| Flutter Entertainment PLC |
| Naked Wines plc |
Flutter Entertainment and Naked Wines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Flutter Entertainment and Naked Wines
The main advantage of trading using opposite Flutter Entertainment and Naked Wines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flutter Entertainment position performs unexpectedly, Naked Wines 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 Naked Wines will offset losses from the drop in Naked Wines' long position.| Flutter Entertainment vs. Supermarket Income REIT | Flutter Entertainment vs. Berner Kantonalbank AG | Flutter Entertainment vs. MT Bank Corp | Flutter Entertainment vs. Check Point Software |
| Naked Wines vs. Flow Traders NV | Naked Wines vs. Sunny Optical Technology | Naked Wines vs. Pfeiffer Vacuum Technology | Naked Wines vs. Qurate Retail Series |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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