Correlation Between Ryanair Holdings and Fortive

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

Diversification Opportunities for Ryanair Holdings and Fortive

0.48

Correlation Coefficient

Ryanair Holdings  Fortive

Very weak diversification

The 3 months correlation between Ryanair and Fortive is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Ryanair Holdings plc and Fortive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortive 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 Fortive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortive has no effect on the direction of Ryanair Holdings i.e., Ryanair Holdings and Fortive go up and down completely randomly.

Pair Corralation between Ryanair Holdings and Fortive

Assuming the 90 days trading horizon Ryanair Holdings plc is expected to under-perform the Fortive. But the stock apears to be less risky and, when comparing its historical volatility, Ryanair Holdings plc is 1.08 times less risky than Fortive. The stock trades about -0.29 of its potential returns per unit of risk. The Fortive is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  7,440  in Fortive on October 9, 2024 and sell it today you would lose (114.00) from holding Fortive or give up 1.53% of portfolio value over 90 days.

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

Ryanair Holdings plc  vs.  Fortive

Ryanair Holdings plc

Risk-Adjusted Performance

10 of 100

Good

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

Fortive

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Fortive are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Fortive may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Ryanair Holdings and Fortive

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

The idea behind Ryanair Holdings plc and Fortive 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.