Correlation Between Flutter Entertainment and SBM Offshore
Can any of the company-specific risk be diversified away by investing in both Flutter Entertainment and SBM Offshore 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 SBM Offshore 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 SBM Offshore NV, you can compare the effects of market volatilities on Flutter Entertainment and SBM Offshore 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 SBM Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flutter Entertainment and SBM Offshore.
Diversification Opportunities for Flutter Entertainment and SBM Offshore
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Flutter and SBM is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Flutter Entertainment PLC and SBM Offshore NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SBM Offshore NV 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 SBM Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SBM Offshore NV has no effect on the direction of Flutter Entertainment i.e., Flutter Entertainment and SBM Offshore go up and down completely randomly.
Pair Corralation between Flutter Entertainment and SBM Offshore
Assuming the 90 days trading horizon Flutter Entertainment PLC is expected to generate 0.99 times more return on investment than SBM Offshore. However, Flutter Entertainment PLC is 1.01 times less risky than SBM Offshore. It trades about 0.38 of its potential returns per unit of risk. SBM Offshore NV is currently generating about 0.05 per unit of risk. 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 |
Flutter Entertainment PLC vs. SBM Offshore NV
Performance |
| Timeline |
| Flutter Entertainment PLC |
| SBM Offshore NV |
Flutter Entertainment and SBM Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Flutter Entertainment and SBM Offshore
The main advantage of trading using opposite Flutter Entertainment and SBM Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flutter Entertainment position performs unexpectedly, SBM Offshore 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 SBM Offshore will offset losses from the drop in SBM Offshore's long position.| Flutter Entertainment vs. Viridian Therapeutics | Flutter Entertainment vs. CVR Energy | Flutter Entertainment vs. Nationwide Building Society | Flutter Entertainment vs. Dollar Tree |
| SBM Offshore vs. Bankers Investment Trust | SBM Offshore vs. Elmos Semiconductor SE | SBM Offshore vs. Beeks Trading | SBM Offshore vs. Tatton Asset Management |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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