Correlation Between EasyJet Plc and EasyJet PLC

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

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

Diversification Opportunities for EasyJet Plc and EasyJet PLC

0.68

Correlation Coefficient

EasyJet Plc  EasyJet PLC

Poor diversification

The 3 months correlation between EasyJet and EasyJet is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding easyJet plc and EasyJet PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EasyJet PLC ADR 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 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 ADR has no effect on the direction of EasyJet Plc i.e., EasyJet Plc and EasyJet PLC go up and down completely randomly.

Pair Corralation between EasyJet Plc and EasyJet PLC

Assuming the 90 days horizon easyJet plc is expected to generate 1.52 times more return on investment than EasyJet PLC. However, EasyJet Plc is 1.52 times more volatile than EasyJet PLC ADR. It trades about 0.04 of its potential returns per unit of risk. EasyJet PLC ADR is currently generating about 0.03 per unit of risk. If you would invest  535.00  in easyJet plc on December 2, 2024 and sell it today you would earn a total of  126.00  from holding easyJet plc or generate 23.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	74.59%
Values	Daily Returns

easyJet plc  vs.  EasyJet PLC ADR

easyJet plc

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in easyJet plc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, EasyJet Plc may actually be approaching a critical reversion point that can send shares even higher in April 2025.

EasyJet PLC ADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days EasyJet PLC ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong forward-looking indicators, EasyJet PLC is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with EasyJet Plc and EasyJet PLC

The main advantage of trading using opposite EasyJet Plc and EasyJet PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EasyJet Plc 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 easyJet plc and EasyJet PLC ADR 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.