Correlation Between EasyJet PLC and Eastman Chemical

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

By analyzing existing cross correlation between EasyJet PLC and Eastman Chemical Co, you can compare the effects of market volatilities on EasyJet PLC and Eastman Chemical 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 Eastman Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of EasyJet PLC and Eastman Chemical.

Diversification Opportunities for EasyJet PLC and Eastman Chemical

-0.14

Correlation Coefficient

EasyJet PLC  Eastman Chemical

Good diversification

The 3 months correlation between EasyJet and Eastman is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding EasyJet PLC and Eastman Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastman Chemical 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 Eastman Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastman Chemical has no effect on the direction of EasyJet PLC i.e., EasyJet PLC and Eastman Chemical go up and down completely randomly.

Pair Corralation between EasyJet PLC and Eastman Chemical

Assuming the 90 days trading horizon EasyJet PLC is expected to generate 1.22 times more return on investment than Eastman Chemical. However, EasyJet PLC is 1.22 times more volatile than Eastman Chemical Co. It trades about 0.07 of its potential returns per unit of risk. Eastman Chemical Co is currently generating about 0.0 per unit of risk. If you would invest  44,070  in EasyJet PLC on October 22, 2024 and sell it today you would earn a total of  6,330  from holding EasyJet PLC or generate 14.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.8%
Values	Daily Returns

EasyJet PLC  vs.  Eastman Chemical Co

EasyJet PLC

Risk-Adjusted Performance

0 of 100

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 rather sound technical and fundamental indicators, EasyJet PLC is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Eastman Chemical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eastman Chemical Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with EasyJet PLC and Eastman Chemical

The main advantage of trading using opposite EasyJet PLC and Eastman Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EasyJet PLC position performs unexpectedly, Eastman Chemical 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 Eastman Chemical will offset losses from the drop in Eastman Chemical's long position.

The idea behind EasyJet PLC and Eastman Chemical Co 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.