Correlation Between Granite Construction and Flutter Entertainment
Can any of the company-specific risk be diversified away by investing in both Granite Construction 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 Granite Construction and Flutter Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Granite Construction and Flutter Entertainment PLC, you can compare the effects of market volatilities on Granite Construction 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 Granite Construction with a short position of Flutter Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Granite Construction and Flutter Entertainment.
Diversification Opportunities for Granite Construction and Flutter Entertainment
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Granite and Flutter is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Granite Construction 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 Granite Construction 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 Granite Construction 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 Granite Construction i.e., Granite Construction and Flutter Entertainment go up and down completely randomly.
Pair Corralation between Granite Construction and Flutter Entertainment
Assuming the 90 days trading horizon Granite Construction is expected to generate 0.88 times more return on investment than Flutter Entertainment. However, Granite Construction is 1.13 times less risky than Flutter Entertainment. It trades about 0.13 of its potential returns per unit of risk. Flutter Entertainment PLC is currently generating about 0.05 per unit of risk. If you would invest 3,638 in Granite Construction on August 31, 2024 and sell it today you would earn a total of 5,612 from holding Granite Construction or generate 154.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.74% |
| Values | Daily Returns |
Granite Construction vs. Flutter Entertainment PLC
Performance |
| Timeline |
| Granite Construction |
| Flutter Entertainment PLC |
Granite Construction and Flutter Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Granite Construction and Flutter Entertainment
The main advantage of trading using opposite Granite Construction and Flutter Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Granite Construction 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.| Granite Construction vs. Apple Inc | Granite Construction vs. Apple Inc | Granite Construction vs. Apple Inc | Granite Construction vs. Apple Inc |
| Flutter Entertainment vs. Apple Inc | Flutter Entertainment vs. Apple Inc | Flutter Entertainment vs. Apple Inc | Flutter Entertainment vs. Apple Inc |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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