Correlation Between Flutter Entertainment and PennyMac Mortgage
Can any of the company-specific risk be diversified away by investing in both Flutter Entertainment and PennyMac Mortgage 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 PennyMac Mortgage 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 PennyMac Mortgage Investment, you can compare the effects of market volatilities on Flutter Entertainment and PennyMac Mortgage 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 PennyMac Mortgage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flutter Entertainment and PennyMac Mortgage.
Diversification Opportunities for Flutter Entertainment and PennyMac Mortgage
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Flutter and PennyMac is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Flutter Entertainment PLC and PennyMac Mortgage Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PennyMac Mortgage 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 PennyMac Mortgage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PennyMac Mortgage has no effect on the direction of Flutter Entertainment i.e., Flutter Entertainment and PennyMac Mortgage go up and down completely randomly.
Pair Corralation between Flutter Entertainment and PennyMac Mortgage
Assuming the 90 days trading horizon Flutter Entertainment PLC is expected to generate 2.24 times more return on investment than PennyMac Mortgage. However, Flutter Entertainment is 2.24 times more volatile than PennyMac Mortgage Investment. It trades about 0.25 of its potential returns per unit of risk. PennyMac Mortgage Investment is currently generating about 0.04 per unit of risk. If you would invest 23,350 in Flutter Entertainment PLC on September 13, 2024 and sell it today you would earn a total of 2,930 from holding Flutter Entertainment PLC or generate 12.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Flutter Entertainment PLC vs. PennyMac Mortgage Investment
Performance |
| Timeline |
| Flutter Entertainment PLC |
| PennyMac Mortgage |
Flutter Entertainment and PennyMac Mortgage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Flutter Entertainment and PennyMac Mortgage
The main advantage of trading using opposite Flutter Entertainment and PennyMac Mortgage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flutter Entertainment position performs unexpectedly, PennyMac Mortgage 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 PennyMac Mortgage will offset losses from the drop in PennyMac Mortgage's long position.| Flutter Entertainment vs. Apple Inc | Flutter Entertainment vs. Apple Inc | Flutter Entertainment vs. Apple Inc | Flutter Entertainment vs. Apple Inc |
| PennyMac Mortgage vs. Selective Insurance Group | PennyMac Mortgage vs. Direct Line Insurance | PennyMac Mortgage vs. ZURICH INSURANCE GROUP | PennyMac Mortgage vs. Hyster Yale Materials Handling |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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