Correlation Between Flutter Entertainment and NIPPON STEEL
Can any of the company-specific risk be diversified away by investing in both Flutter Entertainment and NIPPON STEEL 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 NIPPON STEEL 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 NIPPON STEEL SPADR, you can compare the effects of market volatilities on Flutter Entertainment and NIPPON STEEL 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 NIPPON STEEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flutter Entertainment and NIPPON STEEL.
Diversification Opportunities for Flutter Entertainment and NIPPON STEEL
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Flutter and NIPPON is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Flutter Entertainment PLC and NIPPON STEEL SPADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NIPPON STEEL SPADR 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 NIPPON STEEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NIPPON STEEL SPADR has no effect on the direction of Flutter Entertainment i.e., Flutter Entertainment and NIPPON STEEL go up and down completely randomly.
Pair Corralation between Flutter Entertainment and NIPPON STEEL
Assuming the 90 days trading horizon Flutter Entertainment PLC is expected to generate 1.67 times more return on investment than NIPPON STEEL. However, Flutter Entertainment is 1.67 times more volatile than NIPPON STEEL SPADR. It trades about 0.34 of its potential returns per unit of risk. NIPPON STEEL SPADR is currently generating about 0.12 per unit of risk. If you would invest 20,970 in Flutter Entertainment PLC on August 25, 2024 and sell it today you would earn a total of 3,730 from holding Flutter Entertainment PLC or generate 17.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Flutter Entertainment PLC vs. NIPPON STEEL SPADR
Performance |
| Timeline |
| Flutter Entertainment PLC |
| NIPPON STEEL SPADR |
Flutter Entertainment and NIPPON STEEL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Flutter Entertainment and NIPPON STEEL
The main advantage of trading using opposite Flutter Entertainment and NIPPON STEEL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flutter Entertainment position performs unexpectedly, NIPPON STEEL 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 NIPPON STEEL will offset losses from the drop in NIPPON STEEL's long position.| Flutter Entertainment vs. Apple Inc | Flutter Entertainment vs. Apple Inc | Flutter Entertainment vs. Apple Inc | Flutter Entertainment vs. Apple Inc |
| NIPPON STEEL vs. ArcelorMittal SA | NIPPON STEEL vs. ArcelorMittal | NIPPON STEEL vs. Nippon Steel | NIPPON STEEL vs. POSCO Holdings |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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