Correlation Between Ryanair Holdings and Southern Copper

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

Diversification Opportunities for Ryanair Holdings and Southern Copper

-0.66

Correlation Coefficient

Ryanair Holdings  Southern Copper

Excellent diversification

The 3 months correlation between Ryanair and Southern is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Ryanair Holdings plc and Southern Copper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern Copper 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 Southern Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern Copper has no effect on the direction of Ryanair Holdings i.e., Ryanair Holdings and Southern Copper go up and down completely randomly.

Pair Corralation between Ryanair Holdings and Southern Copper

Assuming the 90 days trading horizon Ryanair Holdings is expected to generate 1.41 times less return on investment than Southern Copper. But when comparing it to its historical volatility, Ryanair Holdings plc is 1.24 times less risky than Southern Copper. It trades about 0.04 of its potential returns per unit of risk. Southern Copper is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  5,739  in Southern Copper on September 28, 2024 and sell it today you would earn a total of  3,181  from holding Southern Copper or generate 55.43% return on investment over 90 days.

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

Ryanair Holdings plc  vs.  Southern Copper

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. In spite of rather fragile fundamental indicators, Ryanair Holdings exhibited solid returns over the last few months and may actually be approaching a breakup point.

Southern Copper

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Southern Copper has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Ryanair Holdings and Southern Copper

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

The idea behind Ryanair Holdings plc and Southern Copper 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..