Correlation Between Flutter Entertainment and Qinetiq Group

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

Diversification Opportunities for Flutter Entertainment and Qinetiq Group

-0.86

Correlation Coefficient

Flutter Entertainment  Qinetiq Group

Pay attention - limited upside

The 3 months correlation between Flutter and Qinetiq is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Flutter Entertainment PLC and Qinetiq Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qinetiq Group PLC 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 Qinetiq Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qinetiq Group PLC has no effect on the direction of Flutter Entertainment i.e., Flutter Entertainment and Qinetiq Group go up and down completely randomly.

Pair Corralation between Flutter Entertainment and Qinetiq Group

Assuming the 90 days trading horizon Flutter Entertainment PLC is expected to generate 1.25 times more return on investment than Qinetiq Group. However, Flutter Entertainment is 1.25 times more volatile than Qinetiq Group PLC. It trades about 0.2 of its potential returns per unit of risk. Qinetiq Group PLC is currently generating about -0.1 per unit of risk. If you would invest  1,684,000  in Flutter Entertainment PLC on September 13, 2024 and sell it today you would earn a total of  505,000  from holding Flutter Entertainment PLC or generate 29.99% return on investment over 90 days.

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

Flutter Entertainment PLC  vs.  Qinetiq Group PLC

Flutter Entertainment PLC

Risk-Adjusted Performance

16 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Flutter Entertainment PLC are ranked lower than 16 (%) 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.

Qinetiq Group PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Qinetiq Group PLC 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 sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Flutter Entertainment and Qinetiq Group

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

The idea behind Flutter Entertainment PLC and Qinetiq Group 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.