Correlation Between Evolution Gaming and Flutter Entertainment

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

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

Diversification Opportunities for Evolution Gaming and Flutter Entertainment

-0.43

Correlation Coefficient

Evolution Gaming  Flutter Entertainment

Very good diversification

The 3 months correlation between Evolution and Flutter is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Evolution Gaming Group 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 Evolution Gaming 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 Evolution Gaming Group 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 Evolution Gaming i.e., Evolution Gaming and Flutter Entertainment go up and down completely randomly.

Pair Corralation between Evolution Gaming and Flutter Entertainment

Assuming the 90 days trading horizon Evolution Gaming Group is expected to under-perform the Flutter Entertainment. In addition to that, Evolution Gaming is 1.12 times more volatile than Flutter Entertainment PLC. It trades about -0.23 of its total potential returns per unit of risk. Flutter Entertainment PLC is currently generating about 0.02 per unit of volatility. If you would invest  2,078,000  in Flutter Entertainment PLC on September 21, 2024 and sell it today you would earn a total of  8,000  from holding Flutter Entertainment PLC or generate 0.38% return on investment over 90 days.

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

Evolution Gaming Group  vs.  Flutter Entertainment PLC

Evolution Gaming

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Evolution Gaming Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Flutter Entertainment PLC

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Flutter Entertainment PLC are ranked lower than 11 (%) 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.

Pair Trading with Evolution Gaming and Flutter Entertainment

The main advantage of trading using opposite Evolution Gaming and Flutter Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evolution Gaming 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 Evolution Gaming Group 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.

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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.