Correlation Between Flutter Entertainment and IPG Photonics

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

Diversification Opportunities for Flutter Entertainment and IPG Photonics

0.84

Correlation Coefficient

Flutter Entertainment  IPG Photonics

Very poor diversification

The 3 months correlation between Flutter and IPG is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Flutter Entertainment plc and IPG Photonics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IPG Photonics 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 IPG Photonics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IPG Photonics has no effect on the direction of Flutter Entertainment i.e., Flutter Entertainment and IPG Photonics go up and down completely randomly.

Pair Corralation between Flutter Entertainment and IPG Photonics

Given the investment horizon of 90 days Flutter Entertainment is expected to generate 1.04 times less return on investment than IPG Photonics. But when comparing it to its historical volatility, Flutter Entertainment plc is 1.06 times less risky than IPG Photonics. It trades about 0.18 of its potential returns per unit of risk. IPG Photonics is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  6,696  in IPG Photonics on May 24, 2025 and sell it today you would earn a total of  1,545  from holding IPG Photonics or generate 23.07% return on investment over 90 days.

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

Flutter Entertainment plc  vs.  IPG Photonics

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 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Flutter Entertainment unveiled solid returns over the last few months and may actually be approaching a breakup point.

IPG Photonics

Risk-Adjusted Performance

Good

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

Pair Trading with Flutter Entertainment and IPG Photonics

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

The idea behind Flutter Entertainment plc and IPG Photonics 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.

Check out your portfolio center.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.