Correlation Between Aurora Investment and Ryanair Holdings

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

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

Diversification Opportunities for Aurora Investment and Ryanair Holdings

-0.82

Correlation Coefficient

Aurora Investment  Ryanair Holdings

Pay attention - limited upside

The 3 months correlation between Aurora and Ryanair is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Aurora Investment Trust 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 Aurora Investment 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 Aurora Investment Trust 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 Aurora Investment i.e., Aurora Investment and Ryanair Holdings go up and down completely randomly.

Pair Corralation between Aurora Investment and Ryanair Holdings

Assuming the 90 days trading horizon Aurora Investment is expected to generate 2.22 times less return on investment than Ryanair Holdings. But when comparing it to its historical volatility, Aurora Investment Trust is 1.79 times less risky than Ryanair Holdings. It trades about 0.04 of its potential returns per unit of risk. Ryanair Holdings plc is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  109,450  in Ryanair Holdings plc on September 19, 2024 and sell it today you would earn a total of  48,250  from holding Ryanair Holdings plc or generate 44.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	99.8%
Values	Daily Returns

Aurora Investment Trust  vs.  Ryanair Holdings plc

Aurora Investment Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aurora Investment Trust 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.

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 unsteady essential indicators, Ryanair Holdings disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aurora Investment and Ryanair Holdings

The main advantage of trading using opposite Aurora Investment and Ryanair Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aurora Investment 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 Aurora Investment Trust 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.