Correlation Between EasyJet PLC and GlobalData PLC

Can any of the company-specific risk be diversified away by investing in both EasyJet PLC and GlobalData 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 GlobalData 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 GlobalData PLC, you can compare the effects of market volatilities on EasyJet PLC and GlobalData 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 GlobalData PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of EasyJet PLC and GlobalData PLC.

Diversification Opportunities for EasyJet PLC and GlobalData PLC

-0.1

Correlation Coefficient

EasyJet PLC  GlobalData PLC

Good diversification

The 3 months correlation between EasyJet and GlobalData is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding EasyJet PLC and GlobalData PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GlobalData PLC 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 GlobalData PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GlobalData PLC has no effect on the direction of EasyJet PLC i.e., EasyJet PLC and GlobalData PLC go up and down completely randomly.

Pair Corralation between EasyJet PLC and GlobalData PLC

Assuming the 90 days trading horizon EasyJet PLC is expected to generate 13.47 times less return on investment than GlobalData PLC. But when comparing it to its historical volatility, EasyJet PLC is 1.21 times less risky than GlobalData PLC. It trades about 0.0 of its potential returns per unit of risk. GlobalData PLC is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  18,300  in GlobalData PLC on October 23, 2024 and sell it today you would earn a total of  50.00  from holding GlobalData PLC or generate 0.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

EasyJet PLC  vs.  GlobalData PLC

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.

GlobalData PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GlobalData PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, GlobalData PLC is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with EasyJet PLC and GlobalData PLC

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

The idea behind EasyJet PLC and GlobalData 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.