Correlation Between Flutter Entertainment and Diageo PLC
Can any of the company-specific risk be diversified away by investing in both Flutter Entertainment and Diageo PLC 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 Diageo PLC 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 Diageo PLC, you can compare the effects of market volatilities on Flutter Entertainment and Diageo PLC 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 Diageo PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flutter Entertainment and Diageo PLC.
Diversification Opportunities for Flutter Entertainment and Diageo PLC
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Flutter and Diageo is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Flutter Entertainment PLC and Diageo PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diageo PLC 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 Diageo PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diageo PLC has no effect on the direction of Flutter Entertainment i.e., Flutter Entertainment and Diageo PLC go up and down completely randomly.
Pair Corralation between Flutter Entertainment and Diageo PLC
Assuming the 90 days trading horizon Flutter Entertainment PLC is expected to generate 1.67 times more return on investment than Diageo PLC. However, Flutter Entertainment is 1.67 times more volatile than Diageo PLC. It trades about 0.05 of its potential returns per unit of risk. Diageo PLC is currently generating about -0.05 per unit of risk. If you would invest 1,616,500 in Flutter Entertainment PLC on September 12, 2024 and sell it today you would earn a total of 548,500 from holding Flutter Entertainment PLC or generate 33.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Flutter Entertainment PLC vs. Diageo PLC
Performance |
| Timeline |
| Flutter Entertainment PLC |
| Diageo PLC |
Flutter Entertainment and Diageo PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Flutter Entertainment and Diageo PLC
The main advantage of trading using opposite Flutter Entertainment and Diageo PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flutter Entertainment position performs unexpectedly, Diageo PLC 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 Diageo PLC will offset losses from the drop in Diageo PLC's long position.| Flutter Entertainment vs. National Atomic Co | Flutter Entertainment vs. OTP Bank Nyrt | Flutter Entertainment vs. Samsung Electronics Co | Flutter Entertainment vs. Samsung Electronics Co |
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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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