Correlation Between RYANAIR HLDGS and CaixaBank

Can any of the company-specific risk be diversified away by investing in both RYANAIR HLDGS and CaixaBank 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 HLDGS and CaixaBank into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between RYANAIR HLDGS ADR and CaixaBank SA, you can compare the effects of market volatilities on RYANAIR HLDGS and CaixaBank 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 HLDGS with a short position of CaixaBank. Check out your portfolio center. Please also check ongoing floating volatility patterns of RYANAIR HLDGS and CaixaBank.

Diversification Opportunities for RYANAIR HLDGS and CaixaBank

0.28

Correlation Coefficient

RYANAIR HLDGS  CaixaBank

Modest diversification

The 3 months correlation between RYANAIR and CaixaBank is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding RYANAIR HLDGS ADR and CaixaBank SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CaixaBank SA and RYANAIR HLDGS 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 HLDGS ADR are associated (or correlated) with CaixaBank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CaixaBank SA has no effect on the direction of RYANAIR HLDGS i.e., RYANAIR HLDGS and CaixaBank go up and down completely randomly.

Pair Corralation between RYANAIR HLDGS and CaixaBank

Assuming the 90 days trading horizon RYANAIR HLDGS ADR is expected to under-perform the CaixaBank. But the stock apears to be less risky and, when comparing its historical volatility, RYANAIR HLDGS ADR is 1.48 times less risky than CaixaBank. The stock trades about -0.14 of its potential returns per unit of risk. The CaixaBank SA is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  532.00  in CaixaBank SA on October 11, 2024 and sell it today you would earn a total of  29.00  from holding CaixaBank SA or generate 5.45% return on investment over 90 days.

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

RYANAIR HLDGS ADR  vs.  CaixaBank SA

RYANAIR HLDGS ADR

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in RYANAIR HLDGS ADR are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, RYANAIR HLDGS is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

CaixaBank SA

Risk-Adjusted Performance

6 of 100

Insignificant

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

Pair Trading with RYANAIR HLDGS and CaixaBank

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

The idea behind RYANAIR HLDGS ADR and CaixaBank SA 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 Commodity Directory module to find actively traded commodities issued by global exchanges.