Correlation Between TFI International and Ryanair Holdings

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

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

Diversification Opportunities for TFI International and Ryanair Holdings

0.23

Correlation Coefficient

TFI International  Ryanair Holdings

Modest diversification

The 3 months correlation between TFI and Ryanair is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding TFI International 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 TFI International 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 TFI International 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 TFI International i.e., TFI International and Ryanair Holdings go up and down completely randomly.

Pair Corralation between TFI International and Ryanair Holdings

Given the investment horizon of 90 days TFI International is expected to generate 1.3 times less return on investment than Ryanair Holdings. But when comparing it to its historical volatility, TFI International is 1.01 times less risky than Ryanair Holdings. It trades about 0.07 of its potential returns per unit of risk. Ryanair Holdings PLC is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  4,185  in Ryanair Holdings PLC on September 12, 2024 and sell it today you would earn a total of  442.00  from holding Ryanair Holdings PLC or generate 10.56% return on investment over 90 days.

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

TFI International  vs.  Ryanair Holdings PLC

TFI International

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in TFI International are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly conflicting forward indicators, TFI International may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Ryanair Holdings PLC

Risk-Adjusted Performance

7 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ryanair Holdings PLC are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Ryanair Holdings may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with TFI International and Ryanair Holdings

The main advantage of trading using opposite TFI International and Ryanair Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TFI International 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 TFI International 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.

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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.