Correlation Between Flutter Entertainment and Ferguson Plc

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

Diversification Opportunities for Flutter Entertainment and Ferguson Plc

0.87

Correlation Coefficient

Flutter Entertainment  Ferguson Plc

Very poor diversification

The 3 months correlation between Flutter and Ferguson is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Flutter Entertainment PLC and Ferguson Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ferguson 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 Ferguson Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ferguson Plc has no effect on the direction of Flutter Entertainment i.e., Flutter Entertainment and Ferguson Plc go up and down completely randomly.

Pair Corralation between Flutter Entertainment and Ferguson Plc

Assuming the 90 days trading horizon Flutter Entertainment is expected to generate 1.05 times less return on investment than Ferguson Plc. But when comparing it to its historical volatility, Flutter Entertainment PLC is 1.39 times less risky than Ferguson Plc. It trades about 0.3 of its potential returns per unit of risk. Ferguson Plc is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  1,208,303  in Ferguson Plc on April 20, 2025 and sell it today you would earn a total of  449,697  from holding Ferguson Plc or generate 37.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.41%
Values	Daily Returns

Flutter Entertainment PLC  vs.  Ferguson Plc

Flutter Entertainment PLC

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Flutter Entertainment PLC are ranked lower than 23 (%) 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.

Ferguson Plc

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ferguson Plc are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Ferguson Plc unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Flutter Entertainment and Ferguson Plc

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

The idea behind Flutter Entertainment PLC and Ferguson 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.