Correlation Between Fresenius Medical and Ryanair Holdings
Can any of the company-specific risk be diversified away by investing in both Fresenius Medical 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 Fresenius Medical and Ryanair Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fresenius Medical Care and Ryanair Holdings plc, you can compare the effects of market volatilities on Fresenius Medical 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 Fresenius Medical with a short position of Ryanair Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fresenius Medical and Ryanair Holdings.
Diversification Opportunities for Fresenius Medical and Ryanair Holdings
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fresenius and Ryanair is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Fresenius Medical Care 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 Fresenius Medical 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 Fresenius Medical Care 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 Fresenius Medical i.e., Fresenius Medical and Ryanair Holdings go up and down completely randomly.
Pair Corralation between Fresenius Medical and Ryanair Holdings
Assuming the 90 days trading horizon Fresenius Medical is expected to generate 1.01 times less return on investment than Ryanair Holdings. But when comparing it to its historical volatility, Fresenius Medical Care is 1.56 times less risky than Ryanair Holdings. It trades about 0.38 of its potential returns per unit of risk. Ryanair Holdings plc is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 156,800 in Ryanair Holdings plc on November 2, 2024 and sell it today you would earn a total of 16,200 from holding Ryanair Holdings plc or generate 10.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fresenius Medical Care vs. Ryanair Holdings plc
Performance |
| Timeline |
| Fresenius Medical Care |
| Ryanair Holdings plc |
Fresenius Medical and Ryanair Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fresenius Medical and Ryanair Holdings
The main advantage of trading using opposite Fresenius Medical and Ryanair Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fresenius Medical 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.| Fresenius Medical vs. Iron Mountain | Fresenius Medical vs. International Biotechnology Trust | Fresenius Medical vs. United States Steel | Fresenius Medical vs. Impax Environmental Markets |
| Ryanair Holdings vs. Mobius Investment Trust | Ryanair Holdings vs. Monks Investment Trust | Ryanair Holdings vs. Cairo Communication SpA | Ryanair Holdings vs. New Residential 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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