Correlation Between SBM Offshore and Flutter Entertainment
Can any of the company-specific risk be diversified away by investing in both SBM Offshore 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 SBM Offshore and Flutter Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SBM Offshore NV and Flutter Entertainment PLC, you can compare the effects of market volatilities on SBM Offshore 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 SBM Offshore with a short position of Flutter Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBM Offshore and Flutter Entertainment.
Diversification Opportunities for SBM Offshore and Flutter Entertainment
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SBM and Flutter is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding SBM Offshore NV 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 SBM Offshore 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 SBM Offshore NV 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 SBM Offshore i.e., SBM Offshore and Flutter Entertainment go up and down completely randomly.
Pair Corralation between SBM Offshore and Flutter Entertainment
Assuming the 90 days trading horizon SBM Offshore is expected to generate 6.87 times less return on investment than Flutter Entertainment. In addition to that, SBM Offshore is 1.01 times more volatile than Flutter Entertainment PLC. It trades about 0.05 of its total potential returns per unit of risk. Flutter Entertainment PLC is currently generating about 0.38 per unit of volatility. If you would invest 1,814,000 in Flutter Entertainment PLC on September 1, 2024 and sell it today you would earn a total of 347,000 from holding Flutter Entertainment PLC or generate 19.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SBM Offshore NV vs. Flutter Entertainment PLC
Performance |
| Timeline |
| SBM Offshore NV |
| Flutter Entertainment PLC |
SBM Offshore and Flutter Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBM Offshore and Flutter Entertainment
The main advantage of trading using opposite SBM Offshore and Flutter Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBM Offshore 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.| SBM Offshore vs. Bankers Investment Trust | SBM Offshore vs. Elmos Semiconductor SE | SBM Offshore vs. Beeks Trading | SBM Offshore vs. Tatton Asset Management |
| Flutter Entertainment vs. Viridian Therapeutics | Flutter Entertainment vs. CVR Energy | Flutter Entertainment vs. Nationwide Building Society | Flutter Entertainment vs. Dollar Tree |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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