Correlation Between Ryanair Holdings and Lowes Companies

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

Diversification Opportunities for Ryanair Holdings and Lowes Companies

0.51

Correlation Coefficient

Ryanair Holdings  Lowes Companies

Very weak diversification

The 3 months correlation between Ryanair and Lowes is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Ryanair Holdings plc and Lowes Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lowes Companies 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 Lowes Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lowes Companies has no effect on the direction of Ryanair Holdings i.e., Ryanair Holdings and Lowes Companies go up and down completely randomly.

Pair Corralation between Ryanair Holdings and Lowes Companies

Assuming the 90 days trading horizon Ryanair Holdings is expected to generate 2.28 times less return on investment than Lowes Companies. In addition to that, Ryanair Holdings is 1.24 times more volatile than Lowes Companies. It trades about 0.03 of its total potential returns per unit of risk. Lowes Companies is currently generating about 0.09 per unit of volatility. If you would invest  5,316  in Lowes Companies on October 9, 2024 and sell it today you would earn a total of  2,183  from holding Lowes Companies or generate 41.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.19%
Values	Daily Returns

Ryanair Holdings plc  vs.  Lowes Companies

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 somewhat weak basic indicators, Ryanair Holdings may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Lowes Companies

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Lowes Companies are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Lowes Companies is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ryanair Holdings and Lowes Companies

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

The idea behind Ryanair Holdings plc and Lowes Companies 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.