Correlation Between Ryanair Holdings and JetBlue Airways
Can any of the company-specific risk be diversified away by investing in both Ryanair Holdings and JetBlue Airways 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 JetBlue Airways 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 JetBlue Airways Corp, you can compare the effects of market volatilities on Ryanair Holdings and JetBlue Airways 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 JetBlue Airways. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ryanair Holdings and JetBlue Airways.
Diversification Opportunities for Ryanair Holdings and JetBlue Airways
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ryanair and JetBlue is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Ryanair Holdings PLC and JetBlue Airways Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JetBlue Airways Corp 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 JetBlue Airways. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JetBlue Airways Corp has no effect on the direction of Ryanair Holdings i.e., Ryanair Holdings and JetBlue Airways go up and down completely randomly.
Pair Corralation between Ryanair Holdings and JetBlue Airways
Assuming the 90 days horizon Ryanair Holdings PLC is expected to generate 0.61 times more return on investment than JetBlue Airways. However, Ryanair Holdings PLC is 1.64 times less risky than JetBlue Airways. It trades about 0.06 of its potential returns per unit of risk. JetBlue Airways Corp is currently generating about -0.01 per unit of risk. If you would invest 8,796 in Ryanair Holdings PLC on January 24, 2024 and sell it today you would earn a total of 5,282 from holding Ryanair Holdings PLC or generate 60.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ryanair Holdings PLC vs. JetBlue Airways Corp
Performance |
| Timeline |
| Ryanair Holdings PLC |
| JetBlue Airways Corp |
Ryanair Holdings and JetBlue Airways Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ryanair Holdings and JetBlue Airways
The main advantage of trading using opposite Ryanair Holdings and JetBlue Airways positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ryanair Holdings position performs unexpectedly, JetBlue Airways 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 JetBlue Airways will offset losses from the drop in JetBlue Airways' long position.| Ryanair Holdings vs. Allegiant Travel | Ryanair Holdings vs. Azul SA | Ryanair Holdings vs. Alaska Air Group | Ryanair Holdings vs. International Consolidated Airlines |
| JetBlue Airways vs. Frontier Group Holdings | JetBlue Airways vs. Southwest Airlines | JetBlue Airways vs. United Airlines Holdings | JetBlue Airways vs. American Airlines Group |
Check out your portfolio center.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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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