Correlation Between EasyJet PLC and International Consolidated
Can any of the company-specific risk be diversified away by investing in both EasyJet PLC and International Consolidated 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 International Consolidated 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 International Consolidated Airlines, you can compare the effects of market volatilities on EasyJet PLC and International Consolidated 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 International Consolidated. Check out your portfolio center. Please also check ongoing floating volatility patterns of EasyJet PLC and International Consolidated.
Diversification Opportunities for EasyJet PLC and International Consolidated
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between EasyJet and International is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding EasyJet PLC ADR and International Consolidated Air in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Consolidated 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 International Consolidated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Consolidated has no effect on the direction of EasyJet PLC i.e., EasyJet PLC and International Consolidated go up and down completely randomly.
Pair Corralation between EasyJet PLC and International Consolidated
Assuming the 90 days horizon EasyJet PLC ADR is expected to under-perform the International Consolidated. But the otc stock apears to be less risky and, when comparing its historical volatility, EasyJet PLC ADR is 2.93 times less risky than International Consolidated. The otc stock trades about -0.04 of its potential returns per unit of risk. The International Consolidated Airlines is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 270.00 in International Consolidated Airlines on August 28, 2024 and sell it today you would earn a total of 45.00 from holding International Consolidated Airlines or generate 16.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
EasyJet PLC ADR vs. International Consolidated Air
Performance |
| Timeline |
| EasyJet PLC ADR |
| International Consolidated |
EasyJet PLC and International Consolidated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EasyJet PLC and International Consolidated
The main advantage of trading using opposite EasyJet PLC and International Consolidated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EasyJet PLC position performs unexpectedly, International Consolidated 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 International Consolidated will offset losses from the drop in International Consolidated's long position.| EasyJet PLC vs. Cebu Air | EasyJet PLC vs. Finnair Oyj | EasyJet PLC vs. easyJet plc | EasyJet PLC vs. Norse Atlantic ASA |
| International Consolidated vs. Deutsche Lufthansa AG | International Consolidated vs. Air France KLM | International Consolidated vs. Singapore Airlines | International Consolidated vs. Sun Country Airlines |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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