Correlation Between State Bank and Ryanair Holdings

Can any of the company-specific risk be diversified away by investing in both State Bank and Ryanair Holdings 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 State Bank and Ryanair Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between State Bank of and Ryanair Holdings plc, you can compare the effects of market volatilities on State Bank and Ryanair Holdings 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 State Bank with a short position of Ryanair Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Bank and Ryanair Holdings.

Diversification Opportunities for State Bank and Ryanair Holdings

-0.01

Correlation Coefficient

State Bank  Ryanair Holdings

Good diversification

The 3 months correlation between State and Ryanair is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding State Bank of and Ryanair Holdings plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ryanair Holdings plc and State Bank 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 State Bank of are associated (or correlated) with Ryanair Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ryanair Holdings plc has no effect on the direction of State Bank i.e., State Bank and Ryanair Holdings go up and down completely randomly.

Pair Corralation between State Bank and Ryanair Holdings

Assuming the 90 days trading horizon State Bank of is expected to generate 0.77 times more return on investment than Ryanair Holdings. However, State Bank of is 1.3 times less risky than Ryanair Holdings. It trades about 0.05 of its potential returns per unit of risk. Ryanair Holdings plc is currently generating about 0.03 per unit of risk. If you would invest  6,206  in State Bank of on October 23, 2024 and sell it today you would earn a total of  2,794  from holding State Bank of or generate 45.02% return on investment over 90 days.

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

State Bank of  vs.  Ryanair Holdings plc

State Bank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days State Bank of has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, State Bank is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Ryanair Holdings plc

Risk-Adjusted Performance

5 of 100

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. Despite quite uncertain essential indicators, Ryanair Holdings may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with State Bank and Ryanair Holdings

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

The idea behind State Bank of and Ryanair Holdings plc 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.