Correlation Between Flutter Entertainment and Sankyo

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

Diversification Opportunities for Flutter Entertainment and Sankyo

0.25

Correlation Coefficient

Flutter Entertainment  Sankyo

Modest diversification

The 3 months correlation between Flutter and Sankyo is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Flutter Entertainment PLC and Sankyo Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sankyo 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 Sankyo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sankyo has no effect on the direction of Flutter Entertainment i.e., Flutter Entertainment and Sankyo go up and down completely randomly.

Pair Corralation between Flutter Entertainment and Sankyo

Assuming the 90 days horizon Flutter Entertainment PLC is expected to generate 1.02 times more return on investment than Sankyo. However, Flutter Entertainment is 1.02 times more volatile than Sankyo Co. It trades about 0.07 of its potential returns per unit of risk. Sankyo Co is currently generating about 0.05 per unit of risk. If you would invest  12,790  in Flutter Entertainment PLC on September 23, 2024 and sell it today you would earn a total of  12,700  from holding Flutter Entertainment PLC or generate 99.3% return on investment over 90 days.

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

Flutter Entertainment PLC  vs.  Sankyo Co

Flutter Entertainment PLC

Risk-Adjusted Performance

11 of 100

Good

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. Despite nearly fragile basic indicators, Flutter Entertainment reported solid returns over the last few months and may actually be approaching a breakup point.

Sankyo

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sankyo Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Sankyo is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Flutter Entertainment and Sankyo

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

The idea behind Flutter Entertainment PLC and Sankyo Co 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 Global Correlations module to find global opportunities by holding instruments from different markets.