Correlation Between FUTURE GAMING and SSE PLC
Can any of the company-specific risk be diversified away by investing in both FUTURE GAMING and SSE PLC 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 FUTURE GAMING and SSE PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FUTURE GAMING GRP and SSE PLC ADR, you can compare the effects of market volatilities on FUTURE GAMING and SSE PLC 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 FUTURE GAMING with a short position of SSE PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of FUTURE GAMING and SSE PLC.
Diversification Opportunities for FUTURE GAMING and SSE PLC
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FUTURE and SSE is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding FUTURE GAMING GRP and SSE PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SSE PLC ADR and FUTURE GAMING 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 FUTURE GAMING GRP are associated (or correlated) with SSE PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SSE PLC ADR has no effect on the direction of FUTURE GAMING i.e., FUTURE GAMING and SSE PLC go up and down completely randomly.
Pair Corralation between FUTURE GAMING and SSE PLC
Assuming the 90 days trading horizon FUTURE GAMING GRP is expected to generate 4.44 times more return on investment than SSE PLC. However, FUTURE GAMING is 4.44 times more volatile than SSE PLC ADR. It trades about 0.02 of its potential returns per unit of risk. SSE PLC ADR is currently generating about 0.02 per unit of risk. If you would invest 59.00 in FUTURE GAMING GRP on October 4, 2024 and sell it today you would lose (9.00) from holding FUTURE GAMING GRP or give up 15.25% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
FUTURE GAMING GRP vs. SSE PLC ADR
Performance |
Timeline |
FUTURE GAMING GRP |
SSE PLC ADR |
FUTURE GAMING and SSE PLC Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with FUTURE GAMING and SSE PLC
The main advantage of trading using opposite FUTURE GAMING and SSE PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FUTURE GAMING position performs unexpectedly, SSE PLC 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 SSE PLC will offset losses from the drop in SSE PLC's long position.FUTURE GAMING vs. Flutter Entertainment PLC | FUTURE GAMING vs. Scientific Games | FUTURE GAMING vs. International Game Technology | FUTURE GAMING vs. Superior Plus Corp |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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