Correlation Between Merit Medical and Flutter Entertainment
Can any of the company-specific risk be diversified away by investing in both Merit Medical 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 Merit Medical and Flutter Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merit Medical Systems and Flutter Entertainment PLC, you can compare the effects of market volatilities on Merit Medical 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 Merit Medical with a short position of Flutter Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merit Medical and Flutter Entertainment.
Diversification Opportunities for Merit Medical and Flutter Entertainment
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Merit and Flutter is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Merit Medical Systems 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 Merit Medical 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 Merit Medical Systems 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 Merit Medical i.e., Merit Medical and Flutter Entertainment go up and down completely randomly.
Pair Corralation between Merit Medical and Flutter Entertainment
Assuming the 90 days trading horizon Merit Medical is expected to generate 1.76 times less return on investment than Flutter Entertainment. But when comparing it to its historical volatility, Merit Medical Systems is 1.34 times less risky than Flutter Entertainment. It trades about 0.06 of its potential returns per unit of risk. Flutter Entertainment PLC is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 12,995 in Flutter Entertainment PLC on September 14, 2024 and sell it today you would earn a total of 13,885 from holding Flutter Entertainment PLC or generate 106.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
Merit Medical Systems vs. Flutter Entertainment PLC
Performance |
| Timeline |
| Merit Medical Systems |
| Flutter Entertainment PLC |
Merit Medical and Flutter Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merit Medical and Flutter Entertainment
The main advantage of trading using opposite Merit Medical and Flutter Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merit Medical 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.| Merit Medical vs. Apple Inc | Merit Medical vs. Apple Inc | Merit Medical vs. Apple Inc | Merit Medical vs. Apple Inc |
| Flutter Entertainment vs. Wizz Air Holdings | Flutter Entertainment vs. Merit Medical Systems | Flutter Entertainment vs. Avanos Medical | Flutter Entertainment vs. SYSTEMAIR AB |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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