Correlation Between KAR Auction and Flutter Entertainment
Can any of the company-specific risk be diversified away by investing in both KAR Auction 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 KAR Auction and Flutter Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KAR Auction Services and Flutter Entertainment plc, you can compare the effects of market volatilities on KAR Auction 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 KAR Auction with a short position of Flutter Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of KAR Auction and Flutter Entertainment.
Diversification Opportunities for KAR Auction and Flutter Entertainment
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between KAR and Flutter is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding KAR Auction Services 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 KAR Auction 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 KAR Auction Services 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 KAR Auction i.e., KAR Auction and Flutter Entertainment go up and down completely randomly.
Pair Corralation between KAR Auction and Flutter Entertainment
Considering the 90-day investment horizon KAR Auction Services is expected to generate 1.37 times more return on investment than Flutter Entertainment. However, KAR Auction is 1.37 times more volatile than Flutter Entertainment plc. It trades about 0.33 of its potential returns per unit of risk. Flutter Entertainment plc is currently generating about 0.43 per unit of risk. If you would invest 1,641 in KAR Auction Services on August 27, 2024 and sell it today you would earn a total of 379.00 from holding KAR Auction Services or generate 23.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KAR Auction Services vs. Flutter Entertainment plc
Performance |
| Timeline |
| KAR Auction Services |
| Flutter Entertainment plc |
KAR Auction and Flutter Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KAR Auction and Flutter Entertainment
The main advantage of trading using opposite KAR Auction and Flutter Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KAR Auction 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.| KAR Auction vs. Bassett Furniture Industries | KAR Auction vs. Hooker Furniture | KAR Auction vs. Natuzzi SpA | KAR Auction vs. Flexsteel Industries |
| Flutter Entertainment vs. GMS Inc | Flutter Entertainment vs. Consol Energy | Flutter Entertainment vs. Cedar Realty Trust | Flutter Entertainment vs. SEI Investments |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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