Correlation Between Worthington Steel and Flutter Entertainment

Can any of the company-specific risk be diversified away by investing in both Worthington Steel and Flutter Entertainment 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 Worthington Steel and Flutter Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Worthington Steel and Flutter Entertainment plc, you can compare the effects of market volatilities on Worthington Steel and Flutter Entertainment 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 Worthington Steel with a short position of Flutter Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Worthington Steel and Flutter Entertainment.

Diversification Opportunities for Worthington Steel and Flutter Entertainment

0.53

Correlation Coefficient

Worthington Steel  Flutter Entertainment

Very weak diversification

The 3 months correlation between Worthington and Flutter is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Worthington Steel and Flutter Entertainment plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flutter Entertainment plc and Worthington Steel 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 Worthington Steel are associated (or correlated) with Flutter Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flutter Entertainment plc has no effect on the direction of Worthington Steel i.e., Worthington Steel and Flutter Entertainment go up and down completely randomly.

Pair Corralation between Worthington Steel and Flutter Entertainment

Allowing for the 90-day total investment horizon Worthington Steel is expected to under-perform the Flutter Entertainment. In addition to that, Worthington Steel is 1.61 times more volatile than Flutter Entertainment plc. It trades about -0.03 of its total potential returns per unit of risk. Flutter Entertainment plc is currently generating about 0.07 per unit of volatility. If you would invest  23,613  in Flutter Entertainment plc on October 9, 2024 and sell it today you would earn a total of  1,899  from holding Flutter Entertainment plc or generate 8.04% return on investment over 90 days.

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

Worthington Steel  vs.  Flutter Entertainment plc

Worthington Steel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Worthington Steel has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Worthington Steel is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Flutter Entertainment plc

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Flutter Entertainment plc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Flutter Entertainment may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Worthington Steel and Flutter Entertainment

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

The idea behind Worthington Steel and Flutter Entertainment plc 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.

Check out your portfolio center.

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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.