Correlation Between Flutter Entertainment and Bank of New York

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

Diversification Opportunities for Flutter Entertainment and Bank of New York

0.72

Correlation Coefficient

Flutter Entertainment  Bank of New York

Poor diversification

The 3 months correlation between Flutter and Bank is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Flutter Entertainment plc and Bank of New in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of New York 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 Bank of New York. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of New York has no effect on the direction of Flutter Entertainment i.e., Flutter Entertainment and Bank of New York go up and down completely randomly.

Pair Corralation between Flutter Entertainment and Bank of New York

Given the investment horizon of 90 days Flutter Entertainment is expected to generate 8.33 times less return on investment than Bank of New York. But when comparing it to its historical volatility, Flutter Entertainment plc is 1.88 times less risky than Bank of New York. It trades about 0.04 of its potential returns per unit of risk. Bank of New is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  7,757  in Bank of New on October 23, 2024 and sell it today you would earn a total of  572.00  from holding Bank of New or generate 7.37% 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.  Bank of New

Flutter Entertainment plc

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Flutter Entertainment plc are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, Flutter Entertainment unveiled solid returns over the last few months and may actually be approaching a breakup point.

Bank of New York

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bank of New are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain forward-looking signals, Bank of New York may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Flutter Entertainment and Bank of New York

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

The idea behind Flutter Entertainment plc and Bank of New 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.