Correlation Between InterContinental and Ryanair Holdings
Can any of the company-specific risk be diversified away by investing in both InterContinental 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 InterContinental and Ryanair Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between InterContinental Hotels Group and Ryanair Holdings plc, you can compare the effects of market volatilities on InterContinental 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 InterContinental with a short position of Ryanair Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of InterContinental and Ryanair Holdings.
Diversification Opportunities for InterContinental and Ryanair Holdings
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between InterContinental and Ryanair is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding InterContinental Hotels Group 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 InterContinental 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 InterContinental Hotels Group 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 InterContinental i.e., InterContinental and Ryanair Holdings go up and down completely randomly.
Pair Corralation between InterContinental and Ryanair Holdings
Assuming the 90 days trading horizon InterContinental is expected to generate 2.9 times less return on investment than Ryanair Holdings. But when comparing it to its historical volatility, InterContinental Hotels Group is 2.11 times less risky than Ryanair Holdings. It trades about 0.03 of its potential returns per unit of risk. Ryanair Holdings plc is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 156,400 in Ryanair Holdings plc on October 13, 2024 and sell it today you would earn a total of 1,700 from holding Ryanair Holdings plc or generate 1.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
InterContinental Hotels Group vs. Ryanair Holdings plc
Performance |
| Timeline |
| InterContinental Hotels |
| Ryanair Holdings plc |
InterContinental and Ryanair Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with InterContinental and Ryanair Holdings
The main advantage of trading using opposite InterContinental and Ryanair Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InterContinental 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.| InterContinental vs. Anglo Asian Mining | InterContinental vs. Beowulf Mining | InterContinental vs. United Utilities Group | InterContinental vs. Eastinco Mining Exploration |
| Ryanair Holdings vs. Berkshire Hathaway | Ryanair Holdings vs. Samsung Electronics Co | Ryanair Holdings vs. Samsung Electronics Co | Ryanair Holdings vs. Chocoladefabriken Lindt Spruengli |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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