Correlation Between Flutter Entertainment and Nufarm
Can any of the company-specific risk be diversified away by investing in both Flutter Entertainment and Nufarm 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 Nufarm 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 Nufarm Limited, you can compare the effects of market volatilities on Flutter Entertainment and Nufarm 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 Nufarm. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flutter Entertainment and Nufarm.
Diversification Opportunities for Flutter Entertainment and Nufarm
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Flutter and Nufarm is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Flutter Entertainment PLC and Nufarm Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nufarm Limited 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 Nufarm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nufarm Limited has no effect on the direction of Flutter Entertainment i.e., Flutter Entertainment and Nufarm go up and down completely randomly.
Pair Corralation between Flutter Entertainment and Nufarm
Assuming the 90 days trading horizon Flutter Entertainment PLC is expected to generate 1.02 times more return on investment than Nufarm. However, Flutter Entertainment is 1.02 times more volatile than Nufarm Limited. It trades about 0.38 of its potential returns per unit of risk. Nufarm Limited is currently generating about 0.01 per unit of risk. If you would invest 21,350 in Flutter Entertainment PLC on September 2, 2024 and sell it today you would earn a total of 4,230 from holding Flutter Entertainment PLC or generate 19.81% 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. Nufarm Limited
Performance |
| Timeline |
| Flutter Entertainment PLC |
| Nufarm Limited |
Flutter Entertainment and Nufarm Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Flutter Entertainment and Nufarm
The main advantage of trading using opposite Flutter Entertainment and Nufarm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flutter Entertainment position performs unexpectedly, Nufarm 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 Nufarm will offset losses from the drop in Nufarm's long position.| 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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