Correlation Between Flutter Entertainment and Argo Blockchain

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

Diversification Opportunities for Flutter Entertainment and Argo Blockchain

0.14

Correlation Coefficient

Flutter Entertainment  Argo Blockchain

Average diversification

The 3 months correlation between Flutter and Argo is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Flutter Entertainment plc and Argo Blockchain plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Argo Blockchain 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 Argo Blockchain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Argo Blockchain plc has no effect on the direction of Flutter Entertainment i.e., Flutter Entertainment and Argo Blockchain go up and down completely randomly.

Pair Corralation between Flutter Entertainment and Argo Blockchain

Given the investment horizon of 90 days Flutter Entertainment is expected to generate 1.76 times less return on investment than Argo Blockchain. In addition to that, Flutter Entertainment is 1.79 times more volatile than Argo Blockchain plc. It trades about 0.03 of its total potential returns per unit of risk. Argo Blockchain plc is currently generating about 0.1 per unit of volatility. If you would invest  763.00  in Argo Blockchain plc on December 4, 2024 and sell it today you would earn a total of  22.00  from holding Argo Blockchain plc or generate 2.88% return on investment over 90 days.

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

Flutter Entertainment plc  vs.  Argo Blockchain plc

Flutter Entertainment plc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Flutter Entertainment plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Flutter Entertainment is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Argo Blockchain plc

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Argo Blockchain plc are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Argo Blockchain disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Flutter Entertainment and Argo Blockchain

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

The idea behind Flutter Entertainment plc and Argo Blockchain 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.