Correlation Between Evolution and Flutter Entertainment
Can any of the company-specific risk be diversified away by investing in both Evolution 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 Evolution and Flutter Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Evolution AB and Flutter Entertainment PLC, you can compare the effects of market volatilities on Evolution 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 Evolution with a short position of Flutter Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evolution and Flutter Entertainment.
Diversification Opportunities for Evolution and Flutter Entertainment
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Evolution and Flutter is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Evolution AB 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 Evolution 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 Evolution AB 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 Evolution i.e., Evolution and Flutter Entertainment go up and down completely randomly.
Pair Corralation between Evolution and Flutter Entertainment
Assuming the 90 days trading horizon Evolution AB is expected to under-perform the Flutter Entertainment. But the stock apears to be less risky and, when comparing its historical volatility, Evolution AB is 1.95 times less risky than Flutter Entertainment. The stock trades about -0.16 of its potential returns per unit of risk. The Flutter Entertainment PLC is currently generating about 0.41 of returns per unit of risk over similar time horizon. If you would invest 21,030 in Flutter Entertainment PLC on September 4, 2024 and sell it today you would earn a total of 5,360 from holding Flutter Entertainment PLC or generate 25.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Evolution AB vs. Flutter Entertainment PLC
Performance |
| Timeline |
| Evolution AB |
| Flutter Entertainment PLC |
Evolution and Flutter Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Evolution and Flutter Entertainment
The main advantage of trading using opposite Evolution and Flutter Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evolution 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.| Evolution vs. Granite Construction | Evolution vs. Pentair plc | Evolution vs. Ryanair Holdings plc | Evolution vs. Fair Isaac 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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