Correlation Between EasyJet PLC and Singapore Airlines
Can any of the company-specific risk be diversified away by investing in both EasyJet PLC and Singapore Airlines 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 Singapore Airlines 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 Singapore Airlines, you can compare the effects of market volatilities on EasyJet PLC and Singapore Airlines 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 Singapore Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of EasyJet PLC and Singapore Airlines.
Diversification Opportunities for EasyJet PLC and Singapore Airlines
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between EasyJet and Singapore is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding EasyJet PLC ADR and Singapore Airlines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singapore Airlines 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 Singapore Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Singapore Airlines has no effect on the direction of EasyJet PLC i.e., EasyJet PLC and Singapore Airlines go up and down completely randomly.
Pair Corralation between EasyJet PLC and Singapore Airlines
Assuming the 90 days horizon EasyJet PLC ADR is expected to generate 2.07 times more return on investment than Singapore Airlines. However, EasyJet PLC is 2.07 times more volatile than Singapore Airlines. It trades about -0.04 of its potential returns per unit of risk. Singapore Airlines is currently generating about -0.18 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 Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
EasyJet PLC ADR vs. Singapore Airlines
Performance |
| Timeline |
| EasyJet PLC ADR |
| Singapore Airlines |
EasyJet PLC and Singapore Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EasyJet PLC and Singapore Airlines
The main advantage of trading using opposite EasyJet PLC and Singapore Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EasyJet PLC position performs unexpectedly, Singapore Airlines 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 Singapore Airlines will offset losses from the drop in Singapore Airlines' long position.| EasyJet PLC vs. Cebu Air | EasyJet PLC vs. Finnair Oyj | EasyJet PLC vs. easyJet plc | EasyJet PLC vs. Norse Atlantic ASA |
| Singapore Airlines vs. Cathay Pacific Airways | Singapore Airlines vs. Qantas Airways Ltd | Singapore Airlines vs. International Consolidated Airlines | Singapore Airlines vs. Singapore 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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