Correlation Between LB Foster and Ryanair Holdings
Can any of the company-specific risk be diversified away by investing in both LB Foster 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 LB Foster and Ryanair Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LB Foster and Ryanair Holdings PLC, you can compare the effects of market volatilities on LB Foster 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 LB Foster with a short position of Ryanair Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of LB Foster and Ryanair Holdings.
Diversification Opportunities for LB Foster and Ryanair Holdings
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between FSTR and Ryanair is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding LB Foster 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 LB Foster 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 LB Foster 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 LB Foster i.e., LB Foster and Ryanair Holdings go up and down completely randomly.
Pair Corralation between LB Foster and Ryanair Holdings
Given the investment horizon of 90 days LB Foster is expected to generate 1.33 times more return on investment than Ryanair Holdings. However, LB Foster is 1.33 times more volatile than Ryanair Holdings PLC. It trades about 0.1 of its potential returns per unit of risk. Ryanair Holdings PLC is currently generating about 0.05 per unit of risk. If you would invest 915.00 in LB Foster on August 28, 2024 and sell it today you would earn a total of 1,913 from holding LB Foster or generate 209.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LB Foster vs. Ryanair Holdings PLC
Performance |
| Timeline |
| LB Foster |
| Ryanair Holdings PLC |
LB Foster and Ryanair Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LB Foster and Ryanair Holdings
The main advantage of trading using opposite LB Foster and Ryanair Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LB Foster 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.| LB Foster vs. Trinity Industries | LB Foster vs. Freightcar America | LB Foster vs. Westinghouse Air Brake | LB Foster vs. Norfolk Southern |
| Ryanair Holdings vs. Allegiant Travel | Ryanair Holdings vs. Azul SA | Ryanair Holdings vs. Alaska Air Group | Ryanair Holdings vs. International Consolidated Airlines |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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