Correlation Between INGERSOLL and Ryanair Holdings

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

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

Diversification Opportunities for INGERSOLL and Ryanair Holdings

0.33

Correlation Coefficient

INGERSOLL  Ryanair Holdings

Weak diversification

The 3 months correlation between INGERSOLL and Ryanair is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding INGERSOLL RAND GLOBAL HLDG 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 INGERSOLL 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 INGERSOLL RAND GLOBAL HLDG 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 INGERSOLL i.e., INGERSOLL and Ryanair Holdings go up and down completely randomly.

Pair Corralation between INGERSOLL and Ryanair Holdings

Assuming the 90 days trading horizon INGERSOLL RAND GLOBAL HLDG is expected to generate 33.37 times more return on investment than Ryanair Holdings. However, INGERSOLL is 33.37 times more volatile than Ryanair Holdings PLC. It trades about 0.06 of its potential returns per unit of risk. Ryanair Holdings PLC is currently generating about 0.06 per unit of risk. If you would invest  10,019  in INGERSOLL RAND GLOBAL HLDG on September 20, 2024 and sell it today you would earn a total of  124.00  from holding INGERSOLL RAND GLOBAL HLDG or generate 1.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	43.15%
Values	Daily Returns

INGERSOLL RAND GLOBAL HLDG  vs.  Ryanair Holdings PLC

INGERSOLL RAND GLOBAL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days INGERSOLL RAND GLOBAL HLDG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for INGERSOLL RAND GLOBAL HLDG investors.

Ryanair Holdings PLC

Risk-Adjusted Performance

0 of 100

Very 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.

Pair Trading with INGERSOLL and Ryanair Holdings

The main advantage of trading using opposite INGERSOLL and Ryanair Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INGERSOLL 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 INGERSOLL RAND GLOBAL HLDG 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.