Correlation Between Flutter Entertainment and LBG Media

Can any of the company-specific risk be diversified away by investing in both Flutter Entertainment and LBG Media 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 LBG Media 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 LBG Media PLC, you can compare the effects of market volatilities on Flutter Entertainment and LBG Media 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 LBG Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flutter Entertainment and LBG Media.

Diversification Opportunities for Flutter Entertainment and LBG Media

-0.64

Correlation Coefficient

Flutter Entertainment  LBG Media

Excellent diversification

The 3 months correlation between Flutter and LBG is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Flutter Entertainment PLC and LBG Media PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LBG Media 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 LBG Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LBG Media PLC has no effect on the direction of Flutter Entertainment i.e., Flutter Entertainment and LBG Media go up and down completely randomly.

Pair Corralation between Flutter Entertainment and LBG Media

Assuming the 90 days trading horizon Flutter Entertainment PLC is expected to generate 0.73 times more return on investment than LBG Media. However, Flutter Entertainment PLC is 1.38 times less risky than LBG Media. It trades about 0.15 of its potential returns per unit of risk. LBG Media PLC is currently generating about -0.21 per unit of risk. If you would invest  2,183,000  in Flutter Entertainment PLC on November 20, 2024 and sell it today you would earn a total of  144,000  from holding Flutter Entertainment PLC or generate 6.6% 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.  LBG Media PLC

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.

LBG Media PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days LBG Media PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in March 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Flutter Entertainment and LBG Media

The main advantage of trading using opposite Flutter Entertainment and LBG Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flutter Entertainment position performs unexpectedly, LBG Media 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 LBG Media will offset losses from the drop in LBG Media's long position.

The idea behind Flutter Entertainment PLC and LBG Media 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.

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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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.