Correlation Between Ryanair Holdings and GWILLI FOOD

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

Diversification Opportunities for Ryanair Holdings and GWILLI FOOD

0.75

Correlation Coefficient

Ryanair Holdings  GWILLI FOOD

Poor diversification

The 3 months correlation between Ryanair and GWILLI is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Ryanair Holdings plc and GWILLI FOOD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GWILLI FOOD 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 GWILLI FOOD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GWILLI FOOD has no effect on the direction of Ryanair Holdings i.e., Ryanair Holdings and GWILLI FOOD go up and down completely randomly.

Pair Corralation between Ryanair Holdings and GWILLI FOOD

Assuming the 90 days trading horizon Ryanair Holdings is expected to generate 2.93 times less return on investment than GWILLI FOOD. But when comparing it to its historical volatility, Ryanair Holdings plc is 2.29 times less risky than GWILLI FOOD. It trades about 0.17 of its potential returns per unit of risk. GWILLI FOOD is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  1,060  in GWILLI FOOD on October 10, 2024 and sell it today you would earn a total of  490.00  from holding GWILLI FOOD or generate 46.23% return on investment over 90 days.

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

Ryanair Holdings plc  vs.  GWILLI FOOD

Ryanair Holdings plc

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ryanair Holdings plc are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental indicators, Ryanair Holdings exhibited solid returns over the last few months and may actually be approaching a breakup point.

GWILLI FOOD

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in GWILLI FOOD are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, GWILLI FOOD exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ryanair Holdings and GWILLI FOOD

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

The idea behind Ryanair Holdings plc and GWILLI FOOD 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.