Correlation Between Ryanair Holdings and G5 Entertainment

Can any of the company-specific risk be diversified away by investing in both Ryanair Holdings and G5 Entertainment 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 G5 Entertainment 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 G5 Entertainment AB, you can compare the effects of market volatilities on Ryanair Holdings and G5 Entertainment 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 G5 Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ryanair Holdings and G5 Entertainment.

Diversification Opportunities for Ryanair Holdings and G5 Entertainment

0.75

Correlation Coefficient

Ryanair Holdings  G5 Entertainment

Poor diversification

The 3 months correlation between Ryanair and 0QUS is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Ryanair Holdings plc and G5 Entertainment AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on G5 Entertainment 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 G5 Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of G5 Entertainment has no effect on the direction of Ryanair Holdings i.e., Ryanair Holdings and G5 Entertainment go up and down completely randomly.

Pair Corralation between Ryanair Holdings and G5 Entertainment

Assuming the 90 days trading horizon Ryanair Holdings plc is expected to under-perform the G5 Entertainment. But the stock apears to be less risky and, when comparing its historical volatility, Ryanair Holdings plc is 2.37 times less risky than G5 Entertainment. The stock trades about -0.15 of its potential returns per unit of risk. The G5 Entertainment AB is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  10,700  in G5 Entertainment AB on October 23, 2024 and sell it today you would earn a total of  1,020  from holding G5 Entertainment AB or generate 9.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Ryanair Holdings plc  vs.  G5 Entertainment AB

Ryanair Holdings plc

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ryanair Holdings plc are ranked lower than 5 (%) 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 February 2025.

G5 Entertainment

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in G5 Entertainment AB are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, G5 Entertainment unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ryanair Holdings and G5 Entertainment

The main advantage of trading using opposite Ryanair Holdings and G5 Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ryanair Holdings position performs unexpectedly, G5 Entertainment 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 G5 Entertainment will offset losses from the drop in G5 Entertainment's long position.

The idea behind Ryanair Holdings plc and G5 Entertainment AB 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.