Correlation Between Global Opportunities and Ryanair Holdings

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

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

Diversification Opportunities for Global Opportunities and Ryanair Holdings

-0.38

Correlation Coefficient

Global Opportunities  Ryanair Holdings

Very good diversification

The 3 months correlation between Global and Ryanair is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Global Opportunities Trust 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 Global Opportunities 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 Global Opportunities Trust 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 Global Opportunities i.e., Global Opportunities and Ryanair Holdings go up and down completely randomly.

Pair Corralation between Global Opportunities and Ryanair Holdings

Assuming the 90 days trading horizon Global Opportunities is expected to generate 1.1 times less return on investment than Ryanair Holdings. But when comparing it to its historical volatility, Global Opportunities Trust is 1.36 times less risky than Ryanair Holdings. It trades about 0.06 of its potential returns per unit of risk. Ryanair Holdings plc is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  152,000  in Ryanair Holdings plc on October 6, 2024 and sell it today you would earn a total of  4,800  from holding Ryanair Holdings plc or generate 3.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.62%
Values	Daily Returns

Global Opportunities Trust  vs.  Ryanair Holdings plc

Global Opportunities

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Opportunities Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Global Opportunities is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Ryanair Holdings plc

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ryanair Holdings plc are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain essential indicators, Ryanair Holdings disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Global Opportunities and Ryanair Holdings

The main advantage of trading using opposite Global Opportunities and Ryanair Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Opportunities 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 Global Opportunities Trust 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..