Correlation Between Global Net and Ryanair Holdings

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

By analyzing existing cross correlation between Global Net Lease and Ryanair Holdings plc, you can compare the effects of market volatilities on Global Net and Ryanair Holdings 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 Global Net with a short position of Ryanair Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Net and Ryanair Holdings.

Diversification Opportunities for Global Net and Ryanair Holdings

-0.89

Correlation Coefficient

Global Net  Ryanair Holdings

Pay attention - limited upside

The 3 months correlation between Global and Ryanair is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding Global Net Lease and Ryanair Holdings plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ryanair Holdings plc and Global Net 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 Global Net Lease are associated (or correlated) with Ryanair Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ryanair Holdings plc has no effect on the direction of Global Net i.e., Global Net and Ryanair Holdings go up and down completely randomly.

Pair Corralation between Global Net and Ryanair Holdings

Assuming the 90 days trading horizon Global Net Lease is expected to under-perform the Ryanair Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Global Net Lease is 1.03 times less risky than Ryanair Holdings. The stock trades about -0.15 of its potential returns per unit of risk. The Ryanair Holdings plc is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  137,900  in Ryanair Holdings plc on September 19, 2024 and sell it today you would earn a total of  19,800  from holding Ryanair Holdings plc or generate 14.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Global Net Lease  vs.  Ryanair Holdings plc

Global Net Lease

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Net Lease 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 January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Ryanair Holdings plc

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ryanair Holdings plc are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain essential indicators, Ryanair Holdings disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Global Net and Ryanair Holdings

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

The idea behind Global Net Lease and Ryanair Holdings 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.