Correlation Between LBG Media and EasyJet PLC
Can any of the company-specific risk be diversified away by investing in both LBG Media and EasyJet PLC 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 LBG Media and EasyJet PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LBG Media PLC and EasyJet PLC, you can compare the effects of market volatilities on LBG Media and EasyJet PLC 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 LBG Media with a short position of EasyJet PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of LBG Media and EasyJet PLC.
Diversification Opportunities for LBG Media and EasyJet PLC
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between LBG and EasyJet is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding LBG Media PLC and EasyJet PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EasyJet PLC and LBG Media 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 LBG Media PLC are associated (or correlated) with EasyJet PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EasyJet PLC has no effect on the direction of LBG Media i.e., LBG Media and EasyJet PLC go up and down completely randomly.
Pair Corralation between LBG Media and EasyJet PLC
Assuming the 90 days trading horizon LBG Media PLC is expected to generate 0.76 times more return on investment than EasyJet PLC. However, LBG Media PLC is 1.31 times less risky than EasyJet PLC. It trades about -0.07 of its potential returns per unit of risk. EasyJet PLC is currently generating about -0.1 per unit of risk. If you would invest 12,700 in LBG Media PLC on November 7, 2024 and sell it today you would lose (300.00) from holding LBG Media PLC or give up 2.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LBG Media PLC vs. EasyJet PLC
Performance |
| Timeline |
| LBG Media PLC |
| EasyJet PLC |
LBG Media and EasyJet PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LBG Media and EasyJet PLC
The main advantage of trading using opposite LBG Media and EasyJet PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LBG Media position performs unexpectedly, EasyJet PLC 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 EasyJet PLC will offset losses from the drop in EasyJet PLC's long position.| LBG Media vs. Public Storage | LBG Media vs. Wyndham Hotels Resorts | LBG Media vs. Wizz Air Holdings | LBG Media vs. Delta Air Lines |
| EasyJet PLC vs. Viridian Therapeutics | EasyJet PLC vs. Nationwide Building Society | EasyJet PLC vs. Digital Realty Trust | EasyJet PLC vs. News Corp Cl |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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