Correlation Between Ryanair Holdings and Sensient Technologies

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

Diversification Opportunities for Ryanair Holdings and Sensient Technologies

0.31

Correlation Coefficient

Ryanair Holdings  Sensient Technologies

Weak diversification

The 3 months correlation between Ryanair and Sensient is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Ryanair Holdings PLC and Sensient Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sensient Technologies 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 Sensient Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sensient Technologies has no effect on the direction of Ryanair Holdings i.e., Ryanair Holdings and Sensient Technologies go up and down completely randomly.

Pair Corralation between Ryanair Holdings and Sensient Technologies

Assuming the 90 days horizon Ryanair Holdings is expected to generate 89.71 times less return on investment than Sensient Technologies. In addition to that, Ryanair Holdings is 1.41 times more volatile than Sensient Technologies. It trades about 0.0 of its total potential returns per unit of risk. Sensient Technologies is currently generating about 0.04 per unit of volatility. If you would invest  6,154  in Sensient Technologies on October 5, 2024 and sell it today you would earn a total of  839.00  from holding Sensient Technologies or generate 13.63% return on investment over 90 days.

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

Ryanair Holdings PLC  vs.  Sensient Technologies

Ryanair Holdings PLC

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ryanair Holdings PLC are ranked lower than 3 (%) 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.

Sensient Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sensient Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Ryanair Holdings and Sensient Technologies

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

The idea behind Ryanair Holdings PLC and Sensient Technologies 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.