Correlation Between EasyJet PLC and European Metals
Can any of the company-specific risk be diversified away by investing in both EasyJet PLC and European Metals 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 European Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EasyJet PLC and European Metals Holdings, you can compare the effects of market volatilities on EasyJet PLC and European Metals 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 European Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of EasyJet PLC and European Metals.
Diversification Opportunities for EasyJet PLC and European Metals
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between EasyJet and European is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding EasyJet PLC and European Metals Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on European Metals Holdings 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 European Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of European Metals Holdings has no effect on the direction of EasyJet PLC i.e., EasyJet PLC and European Metals go up and down completely randomly.
Pair Corralation between EasyJet PLC and European Metals
Assuming the 90 days trading horizon EasyJet PLC is expected to generate 0.45 times more return on investment than European Metals. However, EasyJet PLC is 2.25 times less risky than European Metals. It trades about 0.03 of its potential returns per unit of risk. European Metals Holdings is currently generating about -0.07 per unit of risk. If you would invest 50,588 in EasyJet PLC on September 24, 2024 and sell it today you would earn a total of 6,572 from holding EasyJet PLC or generate 12.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
EasyJet PLC vs. European Metals Holdings
Performance |
| Timeline |
| EasyJet PLC |
| European Metals Holdings |
EasyJet PLC and European Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EasyJet PLC and European Metals
The main advantage of trading using opposite EasyJet PLC and European Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EasyJet PLC position performs unexpectedly, European Metals 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 European Metals will offset losses from the drop in European Metals' long position.| EasyJet PLC vs. Quadrise Plc | EasyJet PLC vs. ImmuPharma PLC | EasyJet PLC vs. Intuitive Investments Group | EasyJet PLC vs. European Metals Holdings |
| European Metals vs. Fresenius Medical Care | European Metals vs. Oakley Capital Investments | European Metals vs. New Residential Investment | European Metals vs. Compal Electronics GDR |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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