Correlation Between Ryanair Holdings and Kingspan Group
Can any of the company-specific risk be diversified away by investing in both Ryanair Holdings and Kingspan Group 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 Kingspan Group 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 Kingspan Group plc, you can compare the effects of market volatilities on Ryanair Holdings and Kingspan Group 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 Kingspan Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ryanair Holdings and Kingspan Group.
Diversification Opportunities for Ryanair Holdings and Kingspan Group
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ryanair and Kingspan is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Ryanair Holdings plc and Kingspan Group plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kingspan Group plc 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 Kingspan Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kingspan Group plc has no effect on the direction of Ryanair Holdings i.e., Ryanair Holdings and Kingspan Group go up and down completely randomly.
Pair Corralation between Ryanair Holdings and Kingspan Group
Assuming the 90 days trading horizon Ryanair Holdings is expected to generate 1.03 times less return on investment than Kingspan Group. But when comparing it to its historical volatility, Ryanair Holdings plc is 1.08 times less risky than Kingspan Group. It trades about 0.04 of its potential returns per unit of risk. Kingspan Group plc is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 5,649 in Kingspan Group plc on August 31, 2024 and sell it today you would earn a total of 1,511 from holding Kingspan Group plc or generate 26.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ryanair Holdings plc vs. Kingspan Group plc
Performance |
| Timeline |
| Ryanair Holdings plc |
| Kingspan Group plc |
Ryanair Holdings and Kingspan Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ryanair Holdings and Kingspan Group
The main advantage of trading using opposite Ryanair Holdings and Kingspan Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ryanair Holdings position performs unexpectedly, Kingspan Group 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 Kingspan Group will offset losses from the drop in Kingspan Group's long position.| Ryanair Holdings vs. Bank of Ireland | Ryanair Holdings vs. AIB Group PLC | Ryanair Holdings vs. Kingspan Group plc |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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