Correlation Between Atalaya Mining and EasyJet PLC

Can any of the company-specific risk be diversified away by investing in both Atalaya Mining 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 Atalaya Mining and EasyJet PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Atalaya Mining and EasyJet PLC, you can compare the effects of market volatilities on Atalaya Mining 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 Atalaya Mining with a short position of EasyJet PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Atalaya Mining and EasyJet PLC.

Diversification Opportunities for Atalaya Mining and EasyJet PLC

-0.17

Correlation Coefficient

Atalaya Mining  EasyJet PLC

Good diversification

The 3 months correlation between Atalaya and EasyJet is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Atalaya Mining and EasyJet PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EasyJet PLC and Atalaya Mining 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 Atalaya Mining 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 Atalaya Mining i.e., Atalaya Mining and EasyJet PLC go up and down completely randomly.

Pair Corralation between Atalaya Mining and EasyJet PLC

Assuming the 90 days trading horizon Atalaya Mining is expected to generate 1.15 times more return on investment than EasyJet PLC. However, Atalaya Mining is 1.15 times more volatile than EasyJet PLC. It trades about 0.04 of its potential returns per unit of risk. EasyJet PLC is currently generating about -0.1 per unit of risk. If you would invest  34,500  in Atalaya Mining on December 23, 2024 and sell it today you would earn a total of  1,200  from holding Atalaya Mining or generate 3.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Atalaya Mining  vs.  EasyJet PLC

Atalaya Mining

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Atalaya Mining are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Atalaya Mining is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

EasyJet PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days EasyJet PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Atalaya Mining and EasyJet PLC

The main advantage of trading using opposite Atalaya Mining and EasyJet PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Atalaya Mining 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.

The idea behind Atalaya Mining and EasyJet PLC pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.