Correlation Between Flutter Entertainment and E3 LITHIUM

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Can any of the company-specific risk be diversified away by investing in both Flutter Entertainment and E3 LITHIUM 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 E3 LITHIUM 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 E3 LITHIUM LTD, you can compare the effects of market volatilities on Flutter Entertainment and E3 LITHIUM 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 E3 LITHIUM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flutter Entertainment and E3 LITHIUM.

Diversification Opportunities for Flutter Entertainment and E3 LITHIUM

-0.77
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Flutter and OW3 is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Flutter Entertainment PLC and E3 LITHIUM LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on E3 LITHIUM LTD 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 E3 LITHIUM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of E3 LITHIUM LTD has no effect on the direction of Flutter Entertainment i.e., Flutter Entertainment and E3 LITHIUM go up and down completely randomly.

Pair Corralation between Flutter Entertainment and E3 LITHIUM

Assuming the 90 days trading horizon Flutter Entertainment PLC is expected to generate 0.47 times more return on investment than E3 LITHIUM. However, Flutter Entertainment PLC is 2.12 times less risky than E3 LITHIUM. It trades about 0.07 of its potential returns per unit of risk. E3 LITHIUM LTD is currently generating about -0.01 per unit of risk. If you would invest  13,090  in Flutter Entertainment PLC on September 18, 2024 and sell it today you would earn a total of  13,230  from holding Flutter Entertainment PLC or generate 101.07% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Flutter Entertainment PLC  vs.  E3 LITHIUM LTD

 Performance 
       Timeline  
Flutter Entertainment PLC 

Risk-Adjusted Performance

13 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Flutter Entertainment PLC are ranked lower than 13 (%) 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.
E3 LITHIUM LTD 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days E3 LITHIUM LTD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Flutter Entertainment and E3 LITHIUM Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Flutter Entertainment and E3 LITHIUM

The main advantage of trading using opposite Flutter Entertainment and E3 LITHIUM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flutter Entertainment position performs unexpectedly, E3 LITHIUM 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 E3 LITHIUM will offset losses from the drop in E3 LITHIUM's long position.
The idea behind Flutter Entertainment PLC and E3 LITHIUM LTD 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.

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