Correlation Between Flutter Entertainment and Tetragon Financial

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

Diversification Opportunities for Flutter Entertainment and Tetragon Financial

0.71

Correlation Coefficient

Flutter Entertainment  Tetragon Financial

Poor diversification

The 3 months correlation between Flutter and Tetragon is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Flutter Entertainment PLC and Tetragon Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tetragon Financial 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 Tetragon Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tetragon Financial has no effect on the direction of Flutter Entertainment i.e., Flutter Entertainment and Tetragon Financial go up and down completely randomly.

Pair Corralation between Flutter Entertainment and Tetragon Financial

Assuming the 90 days trading horizon Flutter Entertainment is expected to generate 2.61 times less return on investment than Tetragon Financial. But when comparing it to its historical volatility, Flutter Entertainment PLC is 1.04 times less risky than Tetragon Financial. It trades about 0.11 of its potential returns per unit of risk. Tetragon Financial Group is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  1,006  in Tetragon Financial Group on October 10, 2024 and sell it today you would earn a total of  399.00  from holding Tetragon Financial Group or generate 39.66% 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.  Tetragon Financial Group

Flutter Entertainment PLC

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Flutter Entertainment PLC are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Flutter Entertainment unveiled solid returns over the last few months and may actually be approaching a breakup point.

Tetragon Financial

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Tetragon Financial Group are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Tetragon Financial exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Flutter Entertainment and Tetragon Financial

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

The idea behind Flutter Entertainment PLC and Tetragon Financial Group 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.