Correlation Between EasyJet PLC and Air New
Can any of the company-specific risk be diversified away by investing in both EasyJet PLC and Air New 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 EasyJet PLC and Air New into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EasyJet PLC ADR and Air New Zealand, you can compare the effects of market volatilities on EasyJet PLC and Air New 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 EasyJet PLC with a short position of Air New. Check out your portfolio center. Please also check ongoing floating volatility patterns of EasyJet PLC and Air New.
Diversification Opportunities for EasyJet PLC and Air New
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between EasyJet and Air is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding EasyJet PLC ADR and Air New Zealand in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air New Zealand and EasyJet PLC 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 EasyJet PLC ADR are associated (or correlated) with Air New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air New Zealand has no effect on the direction of EasyJet PLC i.e., EasyJet PLC and Air New go up and down completely randomly.
Pair Corralation between EasyJet PLC and Air New
Assuming the 90 days horizon EasyJet PLC ADR is expected to generate 0.57 times more return on investment than Air New. However, EasyJet PLC ADR is 1.75 times less risky than Air New. It trades about -0.04 of its potential returns per unit of risk. Air New Zealand is currently generating about -0.12 per unit of risk. If you would invest 720.00 in EasyJet PLC ADR on August 28, 2024 and sell it today you would lose (33.00) from holding EasyJet PLC ADR or give up 4.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
EasyJet PLC ADR vs. Air New Zealand
Performance |
| Timeline |
| EasyJet PLC ADR |
| Air New Zealand |
EasyJet PLC and Air New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EasyJet PLC and Air New
The main advantage of trading using opposite EasyJet PLC and Air New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EasyJet PLC position performs unexpectedly, Air New 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 Air New will offset losses from the drop in Air New's long position.| EasyJet PLC vs. Cebu Air | EasyJet PLC vs. Finnair Oyj | EasyJet PLC vs. easyJet plc | EasyJet PLC vs. Norse Atlantic ASA |
| Air New vs. AirAsia Group Berhad | Air New vs. ANA Holdings ADR | Air New vs. Air France KLM SA | Air New vs. Cebu Air |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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