Correlation Between Ryanair Holdings and Park Hotels

Can any of the company-specific risk be diversified away by investing in both Ryanair Holdings and Park Hotels 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 Park Hotels 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 Park Hotels Resorts, you can compare the effects of market volatilities on Ryanair Holdings and Park Hotels 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 Park Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ryanair Holdings and Park Hotels.

Diversification Opportunities for Ryanair Holdings and Park Hotels

0.45

Correlation Coefficient

Ryanair Holdings  Park Hotels

Very weak diversification

The 3 months correlation between Ryanair and Park is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Ryanair Holdings plc and Park Hotels Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Park Hotels Resorts 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 Park Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Park Hotels Resorts has no effect on the direction of Ryanair Holdings i.e., Ryanair Holdings and Park Hotels go up and down completely randomly.

Pair Corralation between Ryanair Holdings and Park Hotels

Assuming the 90 days trading horizon Ryanair Holdings plc is expected to generate 1.14 times more return on investment than Park Hotels. However, Ryanair Holdings is 1.14 times more volatile than Park Hotels Resorts. It trades about 0.1 of its potential returns per unit of risk. Park Hotels Resorts is currently generating about 0.07 per unit of risk. If you would invest  137,000  in Ryanair Holdings plc on September 4, 2024 and sell it today you would earn a total of  16,400  from holding Ryanair Holdings plc or generate 11.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Ryanair Holdings plc  vs.  Park Hotels Resorts

Ryanair Holdings plc

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ryanair Holdings plc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain essential indicators, Ryanair Holdings may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Park Hotels Resorts

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Park Hotels Resorts are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Park Hotels may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Ryanair Holdings and Park Hotels

The main advantage of trading using opposite Ryanair Holdings and Park Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ryanair Holdings position performs unexpectedly, Park Hotels 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 Park Hotels will offset losses from the drop in Park Hotels' long position.

The idea behind Ryanair Holdings plc and Park Hotels Resorts pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.