Correlation Between Flutter Entertainment and Ameriprise Financial

Can any of the company-specific risk be diversified away by investing in both Flutter Entertainment and Ameriprise Financial 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 Ameriprise Financial 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 Ameriprise Financial, you can compare the effects of market volatilities on Flutter Entertainment and Ameriprise Financial 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 Ameriprise Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flutter Entertainment and Ameriprise Financial.

Diversification Opportunities for Flutter Entertainment and Ameriprise Financial

0.78

Correlation Coefficient

Flutter Entertainment  Ameriprise Financial

Poor diversification

The 3 months correlation between Flutter and Ameriprise is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Flutter Entertainment plc and Ameriprise Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ameriprise Financial 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 Ameriprise Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ameriprise Financial has no effect on the direction of Flutter Entertainment i.e., Flutter Entertainment and Ameriprise Financial go up and down completely randomly.

Pair Corralation between Flutter Entertainment and Ameriprise Financial

Given the investment horizon of 90 days Flutter Entertainment plc is expected to generate 0.96 times more return on investment than Ameriprise Financial. However, Flutter Entertainment plc is 1.04 times less risky than Ameriprise Financial. It trades about 0.14 of its potential returns per unit of risk. Ameriprise Financial is currently generating about 0.06 per unit of risk. If you would invest  22,900  in Flutter Entertainment plc on October 23, 2024 and sell it today you would earn a total of  3,410  from holding Flutter Entertainment plc or generate 14.89% return on investment over 90 days.

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

Flutter Entertainment plc  vs.  Ameriprise Financial

Flutter Entertainment plc

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Flutter Entertainment plc are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, Flutter Entertainment unveiled solid returns over the last few months and may actually be approaching a breakup point.

Ameriprise Financial

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ameriprise Financial are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain primary indicators, Ameriprise Financial may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Flutter Entertainment and Ameriprise Financial

The main advantage of trading using opposite Flutter Entertainment and Ameriprise Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flutter Entertainment position performs unexpectedly, Ameriprise Financial 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 Ameriprise Financial will offset losses from the drop in Ameriprise Financial's long position.

The idea behind Flutter Entertainment plc and Ameriprise Financial 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..