Correlation Between Ryanair Holdings and MI Homes

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

Diversification Opportunities for Ryanair Holdings and MI Homes

-0.04

Correlation Coefficient

Ryanair Holdings  MI Homes

Good diversification

The 3 months correlation between Ryanair and MHO is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Ryanair Holdings PLC and MI Homes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MI Homes 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 MI Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MI Homes has no effect on the direction of Ryanair Holdings i.e., Ryanair Holdings and MI Homes go up and down completely randomly.

Pair Corralation between Ryanair Holdings and MI Homes

Assuming the 90 days horizon Ryanair Holdings PLC is expected to generate 0.64 times more return on investment than MI Homes. However, Ryanair Holdings PLC is 1.56 times less risky than MI Homes. It trades about -0.02 of its potential returns per unit of risk. MI Homes is currently generating about -0.2 per unit of risk. If you would invest  4,502  in Ryanair Holdings PLC on September 20, 2024 and sell it today you would lose (53.00) from holding Ryanair Holdings PLC or give up 1.18% of portfolio value over 90 days.

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

Ryanair Holdings PLC  vs.  MI Homes

Ryanair Holdings PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ryanair Holdings PLC has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

MI Homes

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MI Homes has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Ryanair Holdings and MI Homes

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

The idea behind Ryanair Holdings PLC and MI Homes 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.