Correlation Between Ryanair Holdings and Cumulus Media

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

Diversification Opportunities for Ryanair Holdings and Cumulus Media

-0.18

Correlation Coefficient

Ryanair Holdings  Cumulus Media

Good diversification

The 3 months correlation between Ryanair and Cumulus is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Ryanair Holdings PLC and Cumulus Media Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cumulus Media Class 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 Cumulus Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cumulus Media Class has no effect on the direction of Ryanair Holdings i.e., Ryanair Holdings and Cumulus Media go up and down completely randomly.

Pair Corralation between Ryanair Holdings and Cumulus Media

Assuming the 90 days horizon Ryanair Holdings PLC is expected to generate 0.44 times more return on investment than Cumulus Media. However, Ryanair Holdings PLC is 2.27 times less risky than Cumulus Media. It trades about 0.01 of its potential returns per unit of risk. Cumulus Media Class is currently generating about -0.03 per unit of risk. If you would invest  4,475  in Ryanair Holdings PLC on September 18, 2024 and sell it today you would lose (2.00) from holding Ryanair Holdings PLC or give up 0.04% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Ryanair Holdings PLC  vs.  Cumulus Media Class

Ryanair Holdings PLC

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ryanair Holdings PLC are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Ryanair Holdings is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Cumulus Media Class

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cumulus Media Class has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's essential indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Ryanair Holdings and Cumulus Media

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

The idea behind Ryanair Holdings PLC and Cumulus Media Class 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.