Correlation Between Ryanair Holdings and ESSILORLUXOTTICA

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

By analyzing existing cross correlation between Ryanair Holdings plc and ESSILORLUXOTTICA 12ON, you can compare the effects of market volatilities on Ryanair Holdings and ESSILORLUXOTTICA 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 Ryanair Holdings with a short position of ESSILORLUXOTTICA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ryanair Holdings and ESSILORLUXOTTICA.

Diversification Opportunities for Ryanair Holdings and ESSILORLUXOTTICA

0.82

Correlation Coefficient

Ryanair Holdings  ESSILORLUXOTTICA

Very poor diversification

The 3 months correlation between Ryanair and ESSILORLUXOTTICA is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Ryanair Holdings plc and ESSILORLUXOTTICA 12ON in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ESSILORLUXOTTICA 12ON and Ryanair Holdings 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 Ryanair Holdings plc are associated (or correlated) with ESSILORLUXOTTICA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ESSILORLUXOTTICA 12ON has no effect on the direction of Ryanair Holdings i.e., Ryanair Holdings and ESSILORLUXOTTICA go up and down completely randomly.

Pair Corralation between Ryanair Holdings and ESSILORLUXOTTICA

Assuming the 90 days trading horizon Ryanair Holdings plc is expected to generate 1.23 times more return on investment than ESSILORLUXOTTICA. However, Ryanair Holdings is 1.23 times more volatile than ESSILORLUXOTTICA 12ON. It trades about 0.15 of its potential returns per unit of risk. ESSILORLUXOTTICA 12ON is currently generating about 0.08 per unit of risk. If you would invest  1,590  in Ryanair Holdings plc on September 3, 2024 and sell it today you would earn a total of  270.00  from holding Ryanair Holdings plc or generate 16.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Ryanair Holdings plc  vs.  ESSILORLUXOTTICA 12ON

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. In spite of rather fragile fundamental indicators, Ryanair Holdings exhibited solid returns over the last few months and may actually be approaching a breakup point.

ESSILORLUXOTTICA 12ON

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ESSILORLUXOTTICA 12ON are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain essential indicators, ESSILORLUXOTTICA may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Ryanair Holdings and ESSILORLUXOTTICA

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

The idea behind Ryanair Holdings plc and ESSILORLUXOTTICA 12ON 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.