Correlation Between EasyJet PLC and Ebro Foods
Can any of the company-specific risk be diversified away by investing in both EasyJet PLC and Ebro Foods 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 Ebro Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EasyJet PLC and Ebro Foods, you can compare the effects of market volatilities on EasyJet PLC and Ebro Foods 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 Ebro Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of EasyJet PLC and Ebro Foods.
Diversification Opportunities for EasyJet PLC and Ebro Foods
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between EasyJet and Ebro is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding EasyJet PLC and Ebro Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ebro Foods 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 are associated (or correlated) with Ebro Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ebro Foods has no effect on the direction of EasyJet PLC i.e., EasyJet PLC and Ebro Foods go up and down completely randomly.
Pair Corralation between EasyJet PLC and Ebro Foods
Assuming the 90 days trading horizon EasyJet PLC is expected to under-perform the Ebro Foods. In addition to that, EasyJet PLC is 2.59 times more volatile than Ebro Foods. It trades about -0.15 of its total potential returns per unit of risk. Ebro Foods is currently generating about 0.03 per unit of volatility. If you would invest 1,593 in Ebro Foods on October 28, 2024 and sell it today you would earn a total of 9.00 from holding Ebro Foods or generate 0.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
EasyJet PLC vs. Ebro Foods
Performance |
| Timeline |
| EasyJet PLC |
| Ebro Foods |
EasyJet PLC and Ebro Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EasyJet PLC and Ebro Foods
The main advantage of trading using opposite EasyJet PLC and Ebro Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EasyJet PLC position performs unexpectedly, Ebro Foods 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 Ebro Foods will offset losses from the drop in Ebro Foods' long position.| EasyJet PLC vs. Delta Air Lines | EasyJet PLC vs. Pentair PLC | EasyJet PLC vs. Fortuna Silver Mines | EasyJet PLC vs. Porvair plc |
| Ebro Foods vs. Monster Beverage Corp | Ebro Foods vs. Beowulf Mining | Ebro Foods vs. Creo Medical Group | Ebro Foods vs. Advanced Medical Solutions |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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