Correlation Between Flutter Entertainment and CEZ A

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

Diversification Opportunities for Flutter Entertainment and CEZ A

0.71

Correlation Coefficient

Flutter Entertainment  CEZ A

Poor diversification

The 3 months correlation between Flutter and CEZ is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Flutter Entertainment PLC and CEZ a s in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CEZ a s 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 CEZ A. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CEZ a s has no effect on the direction of Flutter Entertainment i.e., Flutter Entertainment and CEZ A go up and down completely randomly.

Pair Corralation between Flutter Entertainment and CEZ A

Assuming the 90 days trading horizon Flutter Entertainment PLC is expected to under-perform the CEZ A. But the stock apears to be less risky and, when comparing its historical volatility, Flutter Entertainment PLC is 1.31 times less risky than CEZ A. The stock trades about -0.01 of its potential returns per unit of risk. The CEZ a s is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  3,856  in CEZ a s on October 22, 2024 and sell it today you would earn a total of  10.00  from holding CEZ a s or generate 0.26% 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.  CEZ a s

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

CEZ a s

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CEZ a s are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CEZ A may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Flutter Entertainment and CEZ A

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

The idea behind Flutter Entertainment PLC and CEZ a s 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.