Correlation Between Flutter Entertainment and ATRESMEDIA

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

Diversification Opportunities for Flutter Entertainment and ATRESMEDIA

-0.01

Correlation Coefficient

Flutter Entertainment  ATRESMEDIA

Good diversification

The 3 months correlation between Flutter and ATRESMEDIA is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Flutter Entertainment PLC and ATRESMEDIA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATRESMEDIA 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 ATRESMEDIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATRESMEDIA has no effect on the direction of Flutter Entertainment i.e., Flutter Entertainment and ATRESMEDIA go up and down completely randomly.

Pair Corralation between Flutter Entertainment and ATRESMEDIA

Assuming the 90 days trading horizon Flutter Entertainment PLC is expected to generate 2.2 times more return on investment than ATRESMEDIA. However, Flutter Entertainment is 2.2 times more volatile than ATRESMEDIA. It trades about 0.1 of its potential returns per unit of risk. ATRESMEDIA is currently generating about -0.05 per unit of risk. If you would invest  21,760  in Flutter Entertainment PLC on October 5, 2024 and sell it today you would earn a total of  2,870  from holding Flutter Entertainment PLC or generate 13.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Flutter Entertainment PLC  vs.  ATRESMEDIA

Flutter Entertainment PLC

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Flutter Entertainment PLC has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

ATRESMEDIA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ATRESMEDIA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, ATRESMEDIA is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Flutter Entertainment and ATRESMEDIA

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

The idea behind Flutter Entertainment PLC and ATRESMEDIA 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.