Correlation Between Ryanair Holdings and Aegean Airlines
Can any of the company-specific risk be diversified away by investing in both Ryanair Holdings and Aegean Airlines 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 Aegean Airlines 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 Aegean Airlines SA, you can compare the effects of market volatilities on Ryanair Holdings and Aegean Airlines 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 Aegean Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ryanair Holdings and Aegean Airlines.
Diversification Opportunities for Ryanair Holdings and Aegean Airlines
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ryanair and Aegean is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Ryanair Holdings PLC and Aegean Airlines SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aegean Airlines SA 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 Aegean Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aegean Airlines SA has no effect on the direction of Ryanair Holdings i.e., Ryanair Holdings and Aegean Airlines go up and down completely randomly.
Pair Corralation between Ryanair Holdings and Aegean Airlines
Assuming the 90 days horizon Ryanair Holdings PLC is expected to generate 1.5 times more return on investment than Aegean Airlines. However, Ryanair Holdings is 1.5 times more volatile than Aegean Airlines SA. It trades about 0.03 of its potential returns per unit of risk. Aegean Airlines SA is currently generating about -0.13 per unit of risk. If you would invest 4,258 in Ryanair Holdings PLC on August 28, 2024 and sell it today you would earn a total of 121.00 from holding Ryanair Holdings PLC or generate 2.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ryanair Holdings PLC vs. Aegean Airlines SA
Performance |
| Timeline |
| Ryanair Holdings PLC |
| Aegean Airlines SA |
Ryanair Holdings and Aegean Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ryanair Holdings and Aegean Airlines
The main advantage of trading using opposite Ryanair Holdings and Aegean Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ryanair Holdings position performs unexpectedly, Aegean Airlines 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 Aegean Airlines will offset losses from the drop in Aegean Airlines' long position.| Ryanair Holdings vs. Allegiant Travel | Ryanair Holdings vs. Azul SA | Ryanair Holdings vs. Alaska Air Group | Ryanair Holdings vs. International Consolidated Airlines |
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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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