Correlation Between Ecofin Global and Flutter Entertainment

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

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

Diversification Opportunities for Ecofin Global and Flutter Entertainment

-0.41

Correlation Coefficient

Ecofin Global  Flutter Entertainment

Very good diversification

The 3 months correlation between Ecofin and Flutter is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Ecofin Global Utilities 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 Ecofin Global 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 Ecofin Global Utilities 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 Ecofin Global i.e., Ecofin Global and Flutter Entertainment go up and down completely randomly.

Pair Corralation between Ecofin Global and Flutter Entertainment

Assuming the 90 days trading horizon Ecofin Global Utilities is expected to under-perform the Flutter Entertainment. But the stock apears to be less risky and, when comparing its historical volatility, Ecofin Global Utilities is 1.73 times less risky than Flutter Entertainment. The stock trades about -0.03 of its potential returns per unit of risk. The Flutter Entertainment PLC is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,199,500  in Flutter Entertainment PLC on September 27, 2024 and sell it today you would earn a total of  871,500  from holding Flutter Entertainment PLC or generate 72.66% return on investment over 90 days.

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

Ecofin Global Utilities  vs.  Flutter Entertainment PLC

Ecofin Global Utilities

Risk-Adjusted Performance

0 of 100

Very Weak

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

Flutter Entertainment PLC

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Flutter Entertainment PLC are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Flutter Entertainment unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ecofin Global and Flutter Entertainment

The main advantage of trading using opposite Ecofin Global and Flutter Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecofin Global 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 Ecofin Global Utilities 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.