Correlation Between Flutter Entertainment and Arthur J

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

Diversification Opportunities for Flutter Entertainment and Arthur J

0.7

Correlation Coefficient

Flutter Entertainment  Arthur J

Poor diversification

The 3 months correlation between Flutter and Arthur is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Flutter Entertainment PLC and Arthur J Gallagher in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arthur J Gallagher 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 Arthur J. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arthur J Gallagher has no effect on the direction of Flutter Entertainment i.e., Flutter Entertainment and Arthur J go up and down completely randomly.

Pair Corralation between Flutter Entertainment and Arthur J

Assuming the 90 days trading horizon Flutter Entertainment PLC is expected to generate 1.1 times more return on investment than Arthur J. However, Flutter Entertainment is 1.1 times more volatile than Arthur J Gallagher. It trades about 0.19 of its potential returns per unit of risk. Arthur J Gallagher is currently generating about 0.15 per unit of risk. If you would invest  24,570  in Flutter Entertainment PLC on October 25, 2024 and sell it today you would earn a total of  1,320  from holding Flutter Entertainment PLC or generate 5.37% 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.  Arthur J Gallagher

Flutter Entertainment PLC

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Flutter Entertainment PLC are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Flutter Entertainment unveiled solid returns over the last few months and may actually be approaching a breakup point.

Arthur J Gallagher

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Arthur J Gallagher are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Arthur J may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Flutter Entertainment and Arthur J

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

The idea behind Flutter Entertainment PLC and Arthur J Gallagher 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.