Correlation Between Flutter Entertainment and Evolution

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

Diversification Opportunities for Flutter Entertainment and Evolution

0.92

Correlation Coefficient

Flutter Entertainment  Evolution

Almost no diversification

The 3 months correlation between Flutter and Evolution is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Flutter Entertainment plc and Evolution AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolution AB 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 Evolution. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evolution AB has no effect on the direction of Flutter Entertainment i.e., Flutter Entertainment and Evolution go up and down completely randomly.

Pair Corralation between Flutter Entertainment and Evolution

Given the investment horizon of 90 days Flutter Entertainment is expected to generate 1.66 times less return on investment than Evolution. But when comparing it to its historical volatility, Flutter Entertainment plc is 1.35 times less risky than Evolution. It trades about 0.14 of its potential returns per unit of risk. Evolution AB is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  6,749  in Evolution AB on May 18, 2025 and sell it today you would earn a total of  2,076  from holding Evolution AB or generate 30.76% return on investment over 90 days.

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

Flutter Entertainment plc  vs.  Evolution AB

Flutter Entertainment plc

Risk-Adjusted Performance

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 unsteady basic indicators, Flutter Entertainment unveiled solid returns over the last few months and may actually be approaching a breakup point.

Evolution AB

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Evolution AB are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Evolution reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Flutter Entertainment and Evolution

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

The idea behind Flutter Entertainment plc and Evolution AB 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 Transaction History module to view history of all your transactions and understand their impact on performance.