Correlation Between Ryanair Holdings and PennantPark Investment
Can any of the company-specific risk be diversified away by investing in both Ryanair Holdings and PennantPark Investment 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 PennantPark Investment 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 PennantPark Investment, you can compare the effects of market volatilities on Ryanair Holdings and PennantPark Investment 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 PennantPark Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ryanair Holdings and PennantPark Investment.
Diversification Opportunities for Ryanair Holdings and PennantPark Investment
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Ryanair and PennantPark is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Ryanair Holdings PLC and PennantPark Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PennantPark Investment 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 PennantPark Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PennantPark Investment has no effect on the direction of Ryanair Holdings i.e., Ryanair Holdings and PennantPark Investment go up and down completely randomly.
Pair Corralation between Ryanair Holdings and PennantPark Investment
Assuming the 90 days horizon Ryanair Holdings PLC is expected to generate 1.53 times more return on investment than PennantPark Investment. However, Ryanair Holdings is 1.53 times more volatile than PennantPark Investment. It trades about 0.0 of its potential returns per unit of risk. PennantPark Investment is currently generating about -0.03 per unit of risk. If you would invest 4,426 in Ryanair Holdings PLC on September 1, 2024 and sell it today you would lose (22.00) from holding Ryanair Holdings PLC or give up 0.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ryanair Holdings PLC vs. PennantPark Investment
Performance |
| Timeline |
| Ryanair Holdings PLC |
| PennantPark Investment |
Ryanair Holdings and PennantPark Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ryanair Holdings and PennantPark Investment
The main advantage of trading using opposite Ryanair Holdings and PennantPark Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ryanair Holdings position performs unexpectedly, PennantPark Investment 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 PennantPark Investment will offset losses from the drop in PennantPark Investment'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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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