Correlation Between Ryanair Holdings and RBC Bearings

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

Diversification Opportunities for Ryanair Holdings and RBC Bearings

0.58

Correlation Coefficient

Ryanair Holdings  RBC Bearings

Very weak diversification

The 3 months correlation between Ryanair and RBC is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Ryanair Holdings PLC and RBC Bearings Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RBC Bearings 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 RBC Bearings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RBC Bearings has no effect on the direction of Ryanair Holdings i.e., Ryanair Holdings and RBC Bearings go up and down completely randomly.

Pair Corralation between Ryanair Holdings and RBC Bearings

Assuming the 90 days horizon Ryanair Holdings is expected to generate 2.02 times less return on investment than RBC Bearings. But when comparing it to its historical volatility, Ryanair Holdings PLC is 1.03 times less risky than RBC Bearings. It trades about 0.08 of its potential returns per unit of risk. RBC Bearings Incorporated is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  28,502  in RBC Bearings Incorporated on December 3, 2024 and sell it today you would earn a total of  7,418  from holding RBC Bearings Incorporated or generate 26.03% return on investment over 90 days.

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

Ryanair Holdings PLC  vs.  RBC Bearings Incorporated

Ryanair Holdings PLC

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ryanair Holdings PLC are ranked lower than 7 (%) 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.

RBC Bearings

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in RBC Bearings Incorporated are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental drivers, RBC Bearings may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Ryanair Holdings and RBC Bearings

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

The idea behind Ryanair Holdings PLC and RBC Bearings Incorporated 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.