Correlation Between Flutter Entertainment and Allison Transmission
Can any of the company-specific risk be diversified away by investing in both Flutter Entertainment and Allison Transmission 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 Allison Transmission 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 Allison Transmission Holdings, you can compare the effects of market volatilities on Flutter Entertainment and Allison Transmission 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 Allison Transmission. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flutter Entertainment and Allison Transmission.
Diversification Opportunities for Flutter Entertainment and Allison Transmission
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Flutter and Allison is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Flutter Entertainment plc and Allison Transmission Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allison Transmission 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 Allison Transmission. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allison Transmission has no effect on the direction of Flutter Entertainment i.e., Flutter Entertainment and Allison Transmission go up and down completely randomly.
Pair Corralation between Flutter Entertainment and Allison Transmission
Given the investment horizon of 90 days Flutter Entertainment plc is expected to generate 0.94 times more return on investment than Allison Transmission. However, Flutter Entertainment plc is 1.07 times less risky than Allison Transmission. It trades about 0.37 of its potential returns per unit of risk. Allison Transmission Holdings is currently generating about 0.32 per unit of risk. If you would invest 22,762 in Flutter Entertainment plc on August 30, 2024 and sell it today you would earn a total of 4,571 from holding Flutter Entertainment plc or generate 20.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Flutter Entertainment plc vs. Allison Transmission Holdings
Performance |
| Timeline |
| Flutter Entertainment plc |
| Allison Transmission |
Flutter Entertainment and Allison Transmission Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Flutter Entertainment and Allison Transmission
The main advantage of trading using opposite Flutter Entertainment and Allison Transmission positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flutter Entertainment position performs unexpectedly, Allison Transmission 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 Allison Transmission will offset losses from the drop in Allison Transmission's long position.| Flutter Entertainment vs. Playtika Holding Corp | Flutter Entertainment vs. Radcom | Flutter Entertainment vs. Codexis | Flutter Entertainment vs. Origin Materials |
| Allison Transmission vs. Gentex | Allison Transmission vs. Adient PLC | Allison Transmission vs. Autoliv | Allison Transmission vs. Fox Factory Holding |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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