Correlation Between Dave and Ryanair Holdings

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

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

Diversification Opportunities for Dave and Ryanair Holdings

0.76

Correlation Coefficient

Dave  Ryanair Holdings

Poor diversification

The 3 months correlation between Dave and Ryanair is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Dave Inc 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 Dave 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 Dave Inc 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 Dave i.e., Dave and Ryanair Holdings go up and down completely randomly.

Pair Corralation between Dave and Ryanair Holdings

Given the investment horizon of 90 days Dave Inc is expected to generate 2.78 times more return on investment than Ryanair Holdings. However, Dave is 2.78 times more volatile than Ryanair Holdings PLC. It trades about 0.1 of its potential returns per unit of risk. Ryanair Holdings PLC is currently generating about -0.12 per unit of risk. If you would invest  3,958  in Dave Inc on January 25, 2024 and sell it today you would earn a total of  333.00  from holding Dave Inc or generate 8.41% return on investment over 90 days.

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

Dave Inc  vs.  Ryanair Holdings PLC

Dave Inc

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dave Inc are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Dave exhibited solid returns over the last few months and may actually be approaching a breakup point.

Ryanair Holdings PLC

Risk-Adjusted Performance

5 of 100

OK

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. In spite of fairly uncertain basic indicators, Ryanair Holdings may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Dave and Ryanair Holdings

The main advantage of trading using opposite Dave and Ryanair Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dave 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 Dave Inc 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.

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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.