Correlation Between Ryanair Holdings and Ecolab

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

Diversification Opportunities for Ryanair Holdings and Ecolab

0.11

Correlation Coefficient

Ryanair Holdings  Ecolab

Average diversification

The 3 months correlation between Ryanair and Ecolab is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Ryanair Holdings PLC and Ecolab Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecolab Inc 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 Ecolab. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecolab Inc has no effect on the direction of Ryanair Holdings i.e., Ryanair Holdings and Ecolab go up and down completely randomly.

Pair Corralation between Ryanair Holdings and Ecolab

Assuming the 90 days horizon Ryanair Holdings PLC is expected to generate 2.0 times more return on investment than Ecolab. However, Ryanair Holdings is 2.0 times more volatile than Ecolab Inc. It trades about -0.02 of its potential returns per unit of risk. Ecolab Inc is currently generating about -0.14 per unit of risk. If you would invest  4,543  in Ryanair Holdings PLC on September 27, 2024 and sell it today you would lose (118.00) from holding Ryanair Holdings PLC or give up 2.6% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	97.67%
Values	Daily Returns

Ryanair Holdings PLC  vs.  Ecolab Inc

Ryanair Holdings PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ryanair Holdings PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Ryanair Holdings is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Ecolab Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ecolab Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, Ecolab is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Ryanair Holdings and Ecolab

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

The idea behind Ryanair Holdings PLC and Ecolab Inc 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.