Correlation Between Ryanair Holdings and Yum Brands
Can any of the company-specific risk be diversified away by investing in both Ryanair Holdings and Yum Brands 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 Yum Brands 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 Yum Brands, you can compare the effects of market volatilities on Ryanair Holdings and Yum Brands 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 Yum Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ryanair Holdings and Yum Brands.
Diversification Opportunities for Ryanair Holdings and Yum Brands
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Ryanair and Yum is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Ryanair Holdings plc and Yum Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yum Brands 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 Yum Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yum Brands has no effect on the direction of Ryanair Holdings i.e., Ryanair Holdings and Yum Brands go up and down completely randomly.
Pair Corralation between Ryanair Holdings and Yum Brands
Assuming the 90 days trading horizon Ryanair Holdings is expected to generate 2.58 times less return on investment than Yum Brands. But when comparing it to its historical volatility, Ryanair Holdings plc is 2.35 times less risky than Yum Brands. It trades about 0.03 of its potential returns per unit of risk. Yum Brands is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 12,055 in Yum Brands on August 29, 2024 and sell it today you would earn a total of 1,854 from holding Yum Brands or generate 15.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.66% |
| Values | Daily Returns |
Ryanair Holdings plc vs. Yum Brands
Performance |
| Timeline |
| Ryanair Holdings plc |
| Yum Brands |
Ryanair Holdings and Yum Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ryanair Holdings and Yum Brands
The main advantage of trading using opposite Ryanair Holdings and Yum Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ryanair Holdings position performs unexpectedly, Yum Brands 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 Yum Brands will offset losses from the drop in Yum Brands' long position.| Ryanair Holdings vs. Lendinvest PLC | Ryanair Holdings vs. Neometals | Ryanair Holdings vs. Coor Service Management | Ryanair Holdings vs. Albion Technology General |
| Yum Brands vs. Lendinvest PLC | Yum Brands vs. Neometals | Yum Brands vs. Coor Service Management | Yum Brands vs. Albion Technology General |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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