Correlation Between Flutter Entertainment and CAL-MAINE FOODS

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

Diversification Opportunities for Flutter Entertainment and CAL-MAINE FOODS

-0.28

Correlation Coefficient

Flutter Entertainment  CAL-MAINE FOODS

Very good diversification

The 3 months correlation between Flutter and CAL-MAINE is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Flutter Entertainment PLC and CAL MAINE FOODS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CAL MAINE FOODS 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 CAL-MAINE FOODS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CAL MAINE FOODS has no effect on the direction of Flutter Entertainment i.e., Flutter Entertainment and CAL-MAINE FOODS go up and down completely randomly.

Pair Corralation between Flutter Entertainment and CAL-MAINE FOODS

Assuming the 90 days trading horizon Flutter Entertainment PLC is expected to generate 0.66 times more return on investment than CAL-MAINE FOODS. However, Flutter Entertainment PLC is 1.51 times less risky than CAL-MAINE FOODS. It trades about 0.04 of its potential returns per unit of risk. CAL MAINE FOODS is currently generating about -0.11 per unit of risk. If you would invest  24,700  in Flutter Entertainment PLC on December 5, 2024 and sell it today you would earn a total of  630.00  from holding Flutter Entertainment PLC or generate 2.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.67%
Values	Daily Returns

Flutter Entertainment PLC  vs.  CAL MAINE FOODS

Flutter Entertainment PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Flutter Entertainment PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Flutter Entertainment is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

CAL MAINE FOODS

Risk-Adjusted Performance

Very Weak

Over the last 90 days CAL MAINE FOODS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, CAL-MAINE FOODS is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Flutter Entertainment and CAL-MAINE FOODS

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

The idea behind Flutter Entertainment PLC and CAL MAINE FOODS 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.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.