Correlation Between Ryanair Holdings and Greencoat Renewables

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

Diversification Opportunities for Ryanair Holdings and Greencoat Renewables

-0.81

Correlation Coefficient

Ryanair Holdings  Greencoat Renewables

Pay attention - limited upside

The 3 months correlation between Ryanair and Greencoat is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Ryanair Holdings plc and Greencoat Renewables PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greencoat Renewables PLC 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 Greencoat Renewables. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greencoat Renewables PLC has no effect on the direction of Ryanair Holdings i.e., Ryanair Holdings and Greencoat Renewables go up and down completely randomly.

Pair Corralation between Ryanair Holdings and Greencoat Renewables

Assuming the 90 days trading horizon Ryanair Holdings plc is expected to generate 1.09 times more return on investment than Greencoat Renewables. However, Ryanair Holdings is 1.09 times more volatile than Greencoat Renewables PLC. It trades about 0.2 of its potential returns per unit of risk. Greencoat Renewables PLC is currently generating about -0.15 per unit of risk. If you would invest  1,623  in Ryanair Holdings plc on September 17, 2024 and sell it today you would earn a total of  310.00  from holding Ryanair Holdings plc or generate 19.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.48%
Values	Daily Returns

Ryanair Holdings plc  vs.  Greencoat Renewables PLC

Ryanair Holdings plc

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ryanair Holdings plc are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Ryanair Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

Greencoat Renewables PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Greencoat Renewables PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Ryanair Holdings and Greencoat Renewables

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

The idea behind Ryanair Holdings plc and Greencoat Renewables 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.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.