Correlation Between Flutter Entertainment and Molson Coors

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

Diversification Opportunities for Flutter Entertainment and Molson Coors

0.87

Correlation Coefficient

Flutter Entertainment  Molson Coors

Very poor diversification

The 3 months correlation between Flutter and Molson is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Flutter Entertainment plc and Molson Coors Brewing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Molson Coors Brewing 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 Molson Coors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Molson Coors Brewing has no effect on the direction of Flutter Entertainment i.e., Flutter Entertainment and Molson Coors go up and down completely randomly.

Pair Corralation between Flutter Entertainment and Molson Coors

Given the investment horizon of 90 days Flutter Entertainment plc is expected to generate 1.03 times more return on investment than Molson Coors. However, Flutter Entertainment is 1.03 times more volatile than Molson Coors Brewing. It trades about -0.28 of its potential returns per unit of risk. Molson Coors Brewing is currently generating about -0.42 per unit of risk. If you would invest  27,471  in Flutter Entertainment plc on October 11, 2024 and sell it today you would lose (1,883) from holding Flutter Entertainment plc or give up 6.85% of portfolio value over 90 days.

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

Flutter Entertainment plc  vs.  Molson Coors Brewing

Flutter Entertainment plc

Risk-Adjusted Performance

11 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Flutter Entertainment plc are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Flutter Entertainment unveiled solid returns over the last few months and may actually be approaching a breakup point.

Molson Coors Brewing

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Molson Coors Brewing are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Molson Coors is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Flutter Entertainment and Molson Coors

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

The idea behind Flutter Entertainment plc and Molson Coors Brewing 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.