Correlation Between GENERAL and Ryanair Holdings

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

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

Diversification Opportunities for GENERAL and Ryanair Holdings

-0.4

Correlation Coefficient

GENERAL  Ryanair Holdings

Very good diversification

The 3 months correlation between GENERAL and Ryanair is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding GENERAL ELEC CAP 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 GENERAL 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 GENERAL ELEC CAP 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 GENERAL i.e., GENERAL and Ryanair Holdings go up and down completely randomly.

Pair Corralation between GENERAL and Ryanair Holdings

Assuming the 90 days trading horizon GENERAL is expected to generate 21.34 times less return on investment than Ryanair Holdings. But when comparing it to its historical volatility, GENERAL ELEC CAP is 1.07 times less risky than Ryanair Holdings. It trades about 0.0 of its potential returns per unit of risk. Ryanair Holdings PLC is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  3,509  in Ryanair Holdings PLC on October 11, 2024 and sell it today you would earn a total of  941.00  from holding Ryanair Holdings PLC or generate 26.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	77.98%
Values	Daily Returns

GENERAL ELEC CAP  vs.  Ryanair Holdings PLC

GENERAL ELEC CAP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GENERAL ELEC CAP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for GENERAL ELEC CAP investors.

Ryanair Holdings PLC

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ryanair Holdings PLC are ranked lower than 2 (%) 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.

Pair Trading with GENERAL and Ryanair Holdings

The main advantage of trading using opposite GENERAL and Ryanair Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GENERAL 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 GENERAL ELEC CAP 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.