Correlation Between Capital Metals and EasyJet PLC
Can any of the company-specific risk be diversified away by investing in both Capital Metals and EasyJet 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 Capital Metals and EasyJet PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capital Metals PLC and EasyJet PLC, you can compare the effects of market volatilities on Capital Metals and EasyJet 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 Capital Metals with a short position of EasyJet PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital Metals and EasyJet PLC.
Diversification Opportunities for Capital Metals and EasyJet PLC
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Capital and EasyJet is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Capital Metals PLC and EasyJet PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EasyJet PLC and Capital Metals 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 Capital Metals PLC are associated (or correlated) with EasyJet PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EasyJet PLC has no effect on the direction of Capital Metals i.e., Capital Metals and EasyJet PLC go up and down completely randomly.
Pair Corralation between Capital Metals and EasyJet PLC
Assuming the 90 days trading horizon Capital Metals PLC is expected to under-perform the EasyJet PLC. In addition to that, Capital Metals is 1.58 times more volatile than EasyJet PLC. It trades about -0.33 of its total potential returns per unit of risk. EasyJet PLC is currently generating about -0.5 per unit of volatility. If you would invest 57,740 in EasyJet PLC on October 12, 2024 and sell it today you would lose (6,000) from holding EasyJet PLC or give up 10.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Capital Metals PLC vs. EasyJet PLC
Performance |
| Timeline |
| Capital Metals PLC |
| EasyJet PLC |
Capital Metals and EasyJet PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital Metals and EasyJet PLC
The main advantage of trading using opposite Capital Metals and EasyJet PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital Metals position performs unexpectedly, EasyJet 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 EasyJet PLC will offset losses from the drop in EasyJet PLC's long position.| Capital Metals vs. Givaudan SA | Capital Metals vs. Antofagasta PLC | Capital Metals vs. Ferrexpo PLC | Capital Metals vs. Atalaya Mining |
| EasyJet PLC vs. Cornish Metals | EasyJet PLC vs. Applied Materials | EasyJet PLC vs. Travel Leisure Co | EasyJet PLC vs. Capital Metals PLC |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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