Correlation Between Ryanair Holdings and PEPSICO

Can any of the company-specific risk be diversified away by investing in both Ryanair Holdings and PEPSICO 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 PEPSICO 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 PEPSICO INC 55, you can compare the effects of market volatilities on Ryanair Holdings and PEPSICO 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 PEPSICO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ryanair Holdings and PEPSICO.

Diversification Opportunities for Ryanair Holdings and PEPSICO

-0.22

Correlation Coefficient

Ryanair Holdings  PEPSICO

Very good diversification

The 3 months correlation between Ryanair and PEPSICO is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Ryanair Holdings PLC and PEPSICO INC 55 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PEPSICO INC 55 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 PEPSICO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PEPSICO INC 55 has no effect on the direction of Ryanair Holdings i.e., Ryanair Holdings and PEPSICO go up and down completely randomly.

Pair Corralation between Ryanair Holdings and PEPSICO

Assuming the 90 days horizon Ryanair Holdings PLC is expected to under-perform the PEPSICO. In addition to that, Ryanair Holdings is 1.19 times more volatile than PEPSICO INC 55. It trades about -0.02 of its total potential returns per unit of risk. PEPSICO INC 55 is currently generating about 0.01 per unit of volatility. If you would invest  10,700  in PEPSICO INC 55 on October 13, 2024 and sell it today you would earn a total of  7.00  from holding PEPSICO INC 55 or generate 0.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	85.25%
Values	Daily Returns

Ryanair Holdings PLC  vs.  PEPSICO INC 55

Ryanair Holdings PLC

Risk-Adjusted Performance

0 of 100

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.

PEPSICO INC 55

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PEPSICO INC 55 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, PEPSICO is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ryanair Holdings and PEPSICO

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

The idea behind Ryanair Holdings PLC and PEPSICO INC 55 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.