Correlation Between Amazon and Ryanair Holdings

Can any of the company-specific risk be diversified away by investing in both Amazon and Ryanair Holdings 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 Amazon and Ryanair Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Amazon Inc and Ryanair Holdings plc, you can compare the effects of market volatilities on Amazon and Ryanair Holdings 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 Amazon with a short position of Ryanair Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and Ryanair Holdings.

Diversification Opportunities for Amazon and Ryanair Holdings

-0.33

Correlation Coefficient

Amazon  Ryanair Holdings

Very good diversification

The 3 months correlation between Amazon and Ryanair is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Ryanair Holdings plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ryanair Holdings plc and Amazon 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 Amazon Inc are associated (or correlated) with Ryanair Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ryanair Holdings plc has no effect on the direction of Amazon i.e., Amazon and Ryanair Holdings go up and down completely randomly.

Pair Corralation between Amazon and Ryanair Holdings

Assuming the 90 days trading horizon Amazon Inc is expected to under-perform the Ryanair Holdings. In addition to that, Amazon is 1.21 times more volatile than Ryanair Holdings plc. It trades about -0.19 of its total potential returns per unit of risk. Ryanair Holdings plc is currently generating about 0.01 per unit of volatility. If you would invest  3,374  in Ryanair Holdings plc on December 25, 2024 and sell it today you would earn a total of  7.00  from holding Ryanair Holdings plc or generate 0.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Amazon Inc  vs.  Ryanair Holdings plc

Amazon Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Amazon Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Ryanair Holdings plc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ryanair Holdings plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Ryanair Holdings is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Amazon and Ryanair Holdings

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

The idea behind Amazon Inc and Ryanair Holdings plc 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.