Correlation Between Ryanair Holdings and Allstate

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

Diversification Opportunities for Ryanair Holdings and Allstate

0.53

Correlation Coefficient

Ryanair Holdings  Allstate

Very weak diversification

The 3 months correlation between Ryanair and Allstate is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Ryanair Holdings PLC and The Allstate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allstate 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 Allstate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allstate has no effect on the direction of Ryanair Holdings i.e., Ryanair Holdings and Allstate go up and down completely randomly.

Pair Corralation between Ryanair Holdings and Allstate

Assuming the 90 days horizon Ryanair Holdings PLC is expected to generate 4.1 times more return on investment than Allstate. However, Ryanair Holdings is 4.1 times more volatile than The Allstate. It trades about 0.06 of its potential returns per unit of risk. The Allstate is currently generating about 0.07 per unit of risk. If you would invest  4,356  in Ryanair Holdings PLC on December 22, 2024 and sell it today you would earn a total of  262.00  from holding Ryanair Holdings PLC or generate 6.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

Ryanair Holdings PLC  vs.  The Allstate

Ryanair Holdings PLC

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ryanair Holdings PLC are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Ryanair Holdings may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Allstate

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in The Allstate are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively steady essential indicators, Allstate is not utilizing all of its potentials. The latest stock price chaos, may contribute to medium-term losses for the stakeholders.

Pair Trading with Ryanair Holdings and Allstate

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

The idea behind Ryanair Holdings PLC and The Allstate 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.