Correlation Between Ryanair Holdings and Enbridge

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

Diversification Opportunities for Ryanair Holdings and Enbridge

0.56

Correlation Coefficient

Ryanair Holdings  Enbridge

Very weak diversification

The 3 months correlation between Ryanair and Enbridge is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Ryanair Holdings plc and Enbridge in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enbridge 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 Enbridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enbridge has no effect on the direction of Ryanair Holdings i.e., Ryanair Holdings and Enbridge go up and down completely randomly.

Pair Corralation between Ryanair Holdings and Enbridge

Assuming the 90 days trading horizon Ryanair Holdings is expected to generate 2.7 times less return on investment than Enbridge. In addition to that, Ryanair Holdings is 1.11 times more volatile than Enbridge. It trades about 0.07 of its total potential returns per unit of risk. Enbridge is currently generating about 0.21 per unit of volatility. If you would invest  3,721  in Enbridge on October 23, 2024 and sell it today you would earn a total of  609.00  from holding Enbridge or generate 16.37% return on investment over 90 days.

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

Ryanair Holdings plc  vs.  Enbridge

Ryanair Holdings plc

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ryanair Holdings plc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Ryanair Holdings is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Enbridge

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Enbridge are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Enbridge reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ryanair Holdings and Enbridge

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

The idea behind Ryanair Holdings plc and Enbridge 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.