Correlation Between Cornish Metals and EasyJet PLC
Can any of the company-specific risk be diversified away by investing in both Cornish 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 Cornish 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 Cornish Metals and EasyJet PLC, you can compare the effects of market volatilities on Cornish 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 Cornish Metals with a short position of EasyJet PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cornish Metals and EasyJet PLC.
Diversification Opportunities for Cornish Metals and EasyJet PLC
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Cornish and EasyJet is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Cornish Metals and EasyJet PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EasyJet PLC and Cornish 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 Cornish Metals 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 Cornish Metals i.e., Cornish Metals and EasyJet PLC go up and down completely randomly.
Pair Corralation between Cornish Metals and EasyJet PLC
Assuming the 90 days trading horizon Cornish Metals is expected to under-perform the EasyJet PLC. In addition to that, Cornish Metals is 1.79 times more volatile than EasyJet PLC. It trades about -0.02 of its total potential returns per unit of risk. EasyJet PLC is currently generating about 0.06 per unit of volatility. If you would invest 32,733 in EasyJet PLC on September 23, 2024 and sell it today you would earn a total of 24,427 from holding EasyJet PLC or generate 74.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cornish Metals vs. EasyJet PLC
Performance |
| Timeline |
| Cornish Metals |
| EasyJet PLC |
Cornish Metals and EasyJet PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cornish Metals and EasyJet PLC
The main advantage of trading using opposite Cornish Metals and EasyJet PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cornish 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.| Cornish Metals vs. Universal Display Corp | Cornish Metals vs. Axway Software SA | Cornish Metals vs. Playtech Plc | Cornish Metals vs. Federal Realty Investment |
| EasyJet PLC vs. Cornish Metals | EasyJet PLC vs. Europa Metals | EasyJet PLC vs. Gaztransport et Technigaz | EasyJet PLC vs. Empire Metals Limited |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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