Correlation Between Ryanair Holdings and Toro

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

Diversification Opportunities for Ryanair Holdings and Toro

-0.65

Correlation Coefficient

Ryanair Holdings  Toro

Excellent diversification

The 3 months correlation between Ryanair and Toro is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Ryanair Holdings PLC and Toro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Toro 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 Toro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Toro has no effect on the direction of Ryanair Holdings i.e., Ryanair Holdings and Toro go up and down completely randomly.

Pair Corralation between Ryanair Holdings and Toro

Assuming the 90 days horizon Ryanair Holdings PLC is expected to generate 0.84 times more return on investment than Toro. However, Ryanair Holdings PLC is 1.19 times less risky than Toro. It trades about 0.06 of its potential returns per unit of risk. Toro is currently generating about -0.1 per unit of risk. If you would invest  4,399  in Ryanair Holdings PLC on December 19, 2024 and sell it today you would earn a total of  311.00  from holding Ryanair Holdings PLC or generate 7.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

Ryanair Holdings PLC  vs.  Toro

Ryanair Holdings PLC

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ryanair Holdings PLC are ranked lower than 5 (%) 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.

Toro

Risk-Adjusted Performance

Very Weak

Over the last 90 days Toro 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 basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Ryanair Holdings and Toro

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

The idea behind Ryanair Holdings PLC and Toro 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.