Correlation Between Amgen and Flutter Entertainment

Can any of the company-specific risk be diversified away by investing in both Amgen 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 Amgen and Flutter Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Amgen Inc and Flutter Entertainment PLC, you can compare the effects of market volatilities on Amgen 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 Amgen with a short position of Flutter Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amgen and Flutter Entertainment.

Diversification Opportunities for Amgen and Flutter Entertainment

-0.84

Correlation Coefficient

Amgen  Flutter Entertainment

Pay attention - limited upside

The 3 months correlation between Amgen and Flutter is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Amgen Inc 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 Amgen 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 Amgen Inc 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 Amgen i.e., Amgen and Flutter Entertainment go up and down completely randomly.

Pair Corralation between Amgen and Flutter Entertainment

Assuming the 90 days trading horizon Amgen Inc is expected to generate 0.7 times more return on investment than Flutter Entertainment. However, Amgen Inc is 1.42 times less risky than Flutter Entertainment. It trades about -0.24 of its potential returns per unit of risk. Flutter Entertainment PLC is currently generating about -0.18 per unit of risk. If you would invest  26,615  in Amgen Inc on October 4, 2024 and sell it today you would lose (1,380) from holding Amgen Inc or give up 5.19% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Amgen Inc  vs.  Flutter Entertainment PLC

Amgen Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amgen Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Flutter Entertainment PLC

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Flutter Entertainment PLC are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Flutter Entertainment unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Amgen and Flutter Entertainment

The main advantage of trading using opposite Amgen and Flutter Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amgen 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.

The idea behind Amgen Inc and Flutter Entertainment PLC pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..