Correlation Between EasyJet PLC and Athelney Trust
Can any of the company-specific risk be diversified away by investing in both EasyJet PLC and Athelney Trust 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 Athelney Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EasyJet PLC and Athelney Trust plc, you can compare the effects of market volatilities on EasyJet PLC and Athelney Trust 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 Athelney Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of EasyJet PLC and Athelney Trust.
Diversification Opportunities for EasyJet PLC and Athelney Trust
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between EasyJet and Athelney is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding EasyJet PLC and Athelney Trust plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Athelney Trust plc 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 Athelney Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Athelney Trust plc has no effect on the direction of EasyJet PLC i.e., EasyJet PLC and Athelney Trust go up and down completely randomly.
Pair Corralation between EasyJet PLC and Athelney Trust
Assuming the 90 days trading horizon EasyJet PLC is expected to generate 2.01 times more return on investment than Athelney Trust. However, EasyJet PLC is 2.01 times more volatile than Athelney Trust plc. It trades about 0.05 of its potential returns per unit of risk. Athelney Trust plc is currently generating about 0.03 per unit of risk. If you would invest 45,040 in EasyJet PLC on October 13, 2024 and sell it today you would earn a total of 5,740 from holding EasyJet PLC or generate 12.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
EasyJet PLC vs. Athelney Trust plc
Performance |
| Timeline |
| EasyJet PLC |
| Athelney Trust plc |
EasyJet PLC and Athelney Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EasyJet PLC and Athelney Trust
The main advantage of trading using opposite EasyJet PLC and Athelney Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EasyJet PLC position performs unexpectedly, Athelney Trust 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 Athelney Trust will offset losses from the drop in Athelney Trust's long position.| EasyJet PLC vs. Cornish Metals | EasyJet PLC vs. Applied Materials | EasyJet PLC vs. Travel Leisure Co | EasyJet PLC vs. Capital Metals PLC |
| Athelney Trust vs. BYD Co | Athelney Trust vs. Volkswagen AG Non Vtg | Athelney Trust vs. United Parcel Service | Athelney Trust vs. Jardine Matheson Holdings |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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