Correlation Between Vantage Drilling and Flutter Entertainment

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

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

Diversification Opportunities for Vantage Drilling and Flutter Entertainment

0.13

Correlation Coefficient

Vantage Drilling  Flutter Entertainment

Average diversification

The 3 months correlation between Vantage and Flutter is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Vantage Drilling International 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 Vantage Drilling 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 Vantage Drilling International 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 Vantage Drilling i.e., Vantage Drilling and Flutter Entertainment go up and down completely randomly.

Pair Corralation between Vantage Drilling and Flutter Entertainment

Assuming the 90 days horizon Vantage Drilling International is not expected to generate positive returns. However, Vantage Drilling International is 24.5 times less risky than Flutter Entertainment. It waists most of its returns potential to compensate for thr risk taken. Flutter Entertainment is generating about 0.22 per unit of risk. If you would invest  23,862  in Flutter Entertainment plc on April 29, 2025 and sell it today you would earn a total of  6,635  from holding Flutter Entertainment plc or generate 27.81% return on investment over 90 days.

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

Vantage Drilling International  vs.  Flutter Entertainment plc

Vantage Drilling Int

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vantage Drilling International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Vantage Drilling is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

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

Pair Trading with Vantage Drilling and Flutter Entertainment

The main advantage of trading using opposite Vantage Drilling and Flutter Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vantage Drilling 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 Vantage Drilling International 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.