Correlation Between Ryanair Holdings and Xenia Hotels

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

Diversification Opportunities for Ryanair Holdings and Xenia Hotels

0.77

Correlation Coefficient

Ryanair Holdings  Xenia Hotels

Poor diversification

The 3 months correlation between Ryanair and Xenia is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Ryanair Holdings plc and Xenia Hotels Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xenia Hotels Resorts 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 Xenia Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xenia Hotels Resorts has no effect on the direction of Ryanair Holdings i.e., Ryanair Holdings and Xenia Hotels go up and down completely randomly.

Pair Corralation between Ryanair Holdings and Xenia Hotels

Assuming the 90 days trading horizon Ryanair Holdings plc is expected to under-perform the Xenia Hotels. But the stock apears to be less risky and, when comparing its historical volatility, Ryanair Holdings plc is 1.74 times less risky than Xenia Hotels. The stock trades about -0.01 of its potential returns per unit of risk. The Xenia Hotels Resorts is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,378  in Xenia Hotels Resorts on October 11, 2024 and sell it today you would earn a total of  52.00  from holding Xenia Hotels Resorts or generate 3.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	97.44%
Values	Daily Returns

Ryanair Holdings plc  vs.  Xenia Hotels Resorts

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. In spite of rather uncertain fundamental indicators, Ryanair Holdings may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Xenia Hotels Resorts

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Xenia Hotels Resorts are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical indicators, Xenia Hotels may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Ryanair Holdings and Xenia Hotels

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

The idea behind Ryanair Holdings plc and Xenia Hotels Resorts 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.

Check out your portfolio center.

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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.