Correlation Between Singapore Airlines and EasyJet Plc
Can any of the company-specific risk be diversified away by investing in both Singapore Airlines 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 Singapore Airlines and EasyJet Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Singapore Airlines and easyJet plc, you can compare the effects of market volatilities on Singapore Airlines 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 Singapore Airlines with a short position of EasyJet Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Singapore Airlines and EasyJet Plc.
Diversification Opportunities for Singapore Airlines and EasyJet Plc
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Singapore and EasyJet is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Singapore Airlines and easyJet plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on easyJet plc and Singapore Airlines 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 Singapore Airlines 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 Singapore Airlines i.e., Singapore Airlines and EasyJet Plc go up and down completely randomly.
Pair Corralation between Singapore Airlines and EasyJet Plc
Assuming the 90 days horizon Singapore Airlines is expected to generate 0.46 times more return on investment than EasyJet Plc. However, Singapore Airlines is 2.19 times less risky than EasyJet Plc. It trades about 0.04 of its potential returns per unit of risk. easyJet plc is currently generating about 0.01 per unit of risk. If you would invest 790.00 in Singapore Airlines on August 29, 2024 and sell it today you would earn a total of 148.00 from holding Singapore Airlines or generate 18.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 68.45% |
| Values | Daily Returns |
Singapore Airlines vs. easyJet plc
Performance |
| Timeline |
| Singapore Airlines |
| easyJet plc |
Singapore Airlines and EasyJet Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Singapore Airlines and EasyJet Plc
The main advantage of trading using opposite Singapore Airlines and EasyJet Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Singapore Airlines 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.| Singapore Airlines vs. Cathay Pacific Airways | Singapore Airlines vs. Qantas Airways Ltd | Singapore Airlines vs. International Consolidated Airlines | Singapore Airlines vs. Singapore Airlines |
| EasyJet Plc vs. Finnair Oyj | EasyJet Plc vs. Norse Atlantic ASA | EasyJet Plc vs. Air New Zealand | EasyJet Plc vs. Air China Limited |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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