Correlation Between EasyJet PLC and Seed Innovations
Can any of the company-specific risk be diversified away by investing in both EasyJet PLC and Seed Innovations 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 Seed Innovations into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EasyJet PLC and Seed Innovations, you can compare the effects of market volatilities on EasyJet PLC and Seed Innovations 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 Seed Innovations. Check out your portfolio center. Please also check ongoing floating volatility patterns of EasyJet PLC and Seed Innovations.
Diversification Opportunities for EasyJet PLC and Seed Innovations
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between EasyJet and Seed is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding EasyJet PLC and Seed Innovations in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seed Innovations 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 Seed Innovations. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seed Innovations has no effect on the direction of EasyJet PLC i.e., EasyJet PLC and Seed Innovations go up and down completely randomly.
Pair Corralation between EasyJet PLC and Seed Innovations
Assuming the 90 days trading horizon EasyJet PLC is expected to generate 0.58 times more return on investment than Seed Innovations. However, EasyJet PLC is 1.72 times less risky than Seed Innovations. It trades about 0.06 of its potential returns per unit of risk. Seed Innovations is currently generating about 0.02 per unit of risk. If you would invest 32,733 in EasyJet PLC on September 24, 2024 and sell it today you would earn a total of 24,427 from holding EasyJet PLC or generate 74.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
EasyJet PLC vs. Seed Innovations
Performance |
| Timeline |
| EasyJet PLC |
| Seed Innovations |
EasyJet PLC and Seed Innovations Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EasyJet PLC and Seed Innovations
The main advantage of trading using opposite EasyJet PLC and Seed Innovations positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EasyJet PLC position performs unexpectedly, Seed Innovations 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 Seed Innovations will offset losses from the drop in Seed Innovations' long position.| EasyJet PLC vs. Quadrise Plc | EasyJet PLC vs. ImmuPharma PLC | EasyJet PLC vs. Intuitive Investments Group | EasyJet PLC vs. European Metals Holdings |
| Seed Innovations vs. Prudential Financial | Seed Innovations vs. Sparebank 1 SR | Seed Innovations vs. Arrow Electronics | Seed Innovations vs. Regions Financial Corp |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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