Correlation Between Marine Products and Flutter Entertainment

Can any of the company-specific risk be diversified away by investing in both Marine Products and Flutter Entertainment 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 Marine Products and Flutter Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Marine Products and Flutter Entertainment plc, you can compare the effects of market volatilities on Marine Products and Flutter Entertainment 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 Marine Products with a short position of Flutter Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marine Products and Flutter Entertainment.

Diversification Opportunities for Marine Products and Flutter Entertainment

0.44

Correlation Coefficient

Marine Products  Flutter Entertainment

Very weak diversification

The 3 months correlation between Marine and Flutter is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Marine Products and Flutter Entertainment plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flutter Entertainment plc and Marine Products 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 Marine Products are associated (or correlated) with Flutter Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flutter Entertainment plc has no effect on the direction of Marine Products i.e., Marine Products and Flutter Entertainment go up and down completely randomly.

Pair Corralation between Marine Products and Flutter Entertainment

Considering the 90-day investment horizon Marine Products is expected to under-perform the Flutter Entertainment. In addition to that, Marine Products is 1.18 times more volatile than Flutter Entertainment plc. It trades about -0.23 of its total potential returns per unit of risk. Flutter Entertainment plc is currently generating about -0.18 per unit of volatility. If you would invest  27,574  in Flutter Entertainment plc on September 27, 2024 and sell it today you would lose (1,425) from holding Flutter Entertainment plc or give up 5.17% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Marine Products  vs.  Flutter Entertainment plc

Marine Products

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Marine Products has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Marine Products is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Flutter Entertainment plc

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Flutter Entertainment plc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Flutter Entertainment may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Marine Products and Flutter Entertainment

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

The idea behind Marine Products and Flutter Entertainment 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.