Correlation Between InterContinental and Ryanair Holdings
Can any of the company-specific risk be diversified away by investing in both InterContinental 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 InterContinental and Ryanair Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between InterContinental Hotels Group and Ryanair Holdings plc, you can compare the effects of market volatilities on InterContinental 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 InterContinental with a short position of Ryanair Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of InterContinental and Ryanair Holdings.
Diversification Opportunities for InterContinental and Ryanair Holdings
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between InterContinental and Ryanair is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding InterContinental Hotels Group 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 InterContinental 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 InterContinental Hotels Group 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 InterContinental i.e., InterContinental and Ryanair Holdings go up and down completely randomly.
Pair Corralation between InterContinental and Ryanair Holdings
Assuming the 90 days trading horizon InterContinental Hotels Group is expected to generate 0.59 times more return on investment than Ryanair Holdings. However, InterContinental Hotels Group is 1.7 times less risky than Ryanair Holdings. It trades about 0.13 of its potential returns per unit of risk. Ryanair Holdings plc is currently generating about 0.04 per unit of risk. If you would invest 465,636 in InterContinental Hotels Group on September 24, 2024 and sell it today you would earn a total of 529,964 from holding InterContinental Hotels Group or generate 113.82% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 99.8% |
Values | Daily Returns |
InterContinental Hotels Group vs. Ryanair Holdings plc
Performance |
Timeline |
InterContinental Hotels |
Ryanair Holdings plc |
InterContinental and Ryanair Holdings Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with InterContinental and Ryanair Holdings
The main advantage of trading using opposite InterContinental and Ryanair Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InterContinental 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.InterContinental vs. National Atomic Co | InterContinental vs. Flutter Entertainment PLC | InterContinental vs. Camellia Plc | InterContinental vs. Marwyn Value Investors |
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Check out your portfolio center.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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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