Correlation Between Centaur Media and Flutter Entertainment

Can any of the company-specific risk be diversified away by investing in both Centaur Media 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 Centaur Media and Flutter Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Centaur Media and Flutter Entertainment PLC, you can compare the effects of market volatilities on Centaur Media 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 Centaur Media with a short position of Flutter Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Centaur Media and Flutter Entertainment.

Diversification Opportunities for Centaur Media and Flutter Entertainment

0.21

Correlation Coefficient

Centaur Media  Flutter Entertainment

Modest diversification

The 3 months correlation between Centaur and Flutter is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Centaur Media 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 Centaur Media 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 Centaur Media 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 Centaur Media i.e., Centaur Media and Flutter Entertainment go up and down completely randomly.

Pair Corralation between Centaur Media and Flutter Entertainment

Assuming the 90 days trading horizon Centaur Media is expected to generate about the same return on investment as Flutter Entertainment PLC. However, Centaur Media is 1.75 times more volatile than Flutter Entertainment PLC. It trades about 0.07 of its potential returns per unit of risk. Flutter Entertainment PLC is currently producing about 0.12 per unit of risk. If you would invest  2,078,000  in Flutter Entertainment PLC on November 20, 2024 and sell it today you would earn a total of  249,000  from holding Flutter Entertainment PLC or generate 11.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Centaur Media  vs.  Flutter Entertainment PLC

Centaur Media

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Centaur Media are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Centaur Media may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Flutter Entertainment PLC

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Flutter Entertainment PLC are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Flutter Entertainment may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Centaur Media and Flutter Entertainment

The main advantage of trading using opposite Centaur Media and Flutter Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Centaur Media 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.

The idea behind Centaur Media and Flutter Entertainment PLC 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.