Correlation Between Donegal Investment and Ryanair Holdings

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

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

Diversification Opportunities for Donegal Investment and Ryanair Holdings

0.15

Correlation Coefficient

Donegal Investment  Ryanair Holdings

Average diversification

The 3 months correlation between Donegal and Ryanair is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Donegal Investment Group 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 Donegal Investment 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 Donegal Investment Group 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 Donegal Investment i.e., Donegal Investment and Ryanair Holdings go up and down completely randomly.

Pair Corralation between Donegal Investment and Ryanair Holdings

Assuming the 90 days trading horizon Donegal Investment is expected to generate 574.67 times less return on investment than Ryanair Holdings. But when comparing it to its historical volatility, Donegal Investment Group is 4.91 times less risky than Ryanair Holdings. It trades about 0.0 of its potential returns per unit of risk. Ryanair Holdings plc is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  1,718  in Ryanair Holdings plc on October 12, 2024 and sell it today you would earn a total of  182.00  from holding Ryanair Holdings plc or generate 10.59% return on investment over 90 days.

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

Donegal Investment Group  vs.  Ryanair Holdings plc

Donegal Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Donegal Investment Group has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Donegal Investment is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Ryanair Holdings plc

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ryanair Holdings plc are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Ryanair Holdings may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Donegal Investment and Ryanair Holdings

The main advantage of trading using opposite Donegal Investment and Ryanair Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Donegal Investment 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 Donegal Investment Group 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.