Correlation Between Ryanair Holdings and Lululemon Athletica
Can any of the company-specific risk be diversified away by investing in both Ryanair Holdings and Lululemon Athletica 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 Lululemon Athletica 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 Lululemon Athletica, you can compare the effects of market volatilities on Ryanair Holdings and Lululemon Athletica 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 Lululemon Athletica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ryanair Holdings and Lululemon Athletica.
Diversification Opportunities for Ryanair Holdings and Lululemon Athletica
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ryanair and Lululemon is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Ryanair Holdings PLC and Lululemon Athletica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lululemon Athletica 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 Lululemon Athletica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lululemon Athletica has no effect on the direction of Ryanair Holdings i.e., Ryanair Holdings and Lululemon Athletica go up and down completely randomly.
Pair Corralation between Ryanair Holdings and Lululemon Athletica
Assuming the 90 days horizon Ryanair Holdings PLC is expected to generate 0.88 times more return on investment than Lululemon Athletica. However, Ryanair Holdings PLC is 1.13 times less risky than Lululemon Athletica. It trades about -0.01 of its potential returns per unit of risk. Lululemon Athletica is currently generating about -0.03 per unit of risk. If you would invest 4,986 in Ryanair Holdings PLC on September 14, 2024 and sell it today you would lose (438.50) from holding Ryanair Holdings PLC or give up 8.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ryanair Holdings PLC vs. Lululemon Athletica
Performance |
| Timeline |
| Ryanair Holdings PLC |
| Lululemon Athletica |
Ryanair Holdings and Lululemon Athletica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ryanair Holdings and Lululemon Athletica
The main advantage of trading using opposite Ryanair Holdings and Lululemon Athletica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ryanair Holdings position performs unexpectedly, Lululemon Athletica 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 Lululemon Athletica will offset losses from the drop in Lululemon Athletica's 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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