Correlation Between Federal Realty and Ryanair Holdings

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

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

Diversification Opportunities for Federal Realty and Ryanair Holdings

0.49

Correlation Coefficient

Federal Realty  Ryanair Holdings

Very weak diversification

The 3 months correlation between Federal and Ryanair is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Federal Realty Investment 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 Federal Realty 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 Federal Realty Investment 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 Federal Realty i.e., Federal Realty and Ryanair Holdings go up and down completely randomly.

Pair Corralation between Federal Realty and Ryanair Holdings

Assuming the 90 days trading horizon Federal Realty is expected to generate 1.28 times less return on investment than Ryanair Holdings. But when comparing it to its historical volatility, Federal Realty Investment is 2.81 times less risky than Ryanair Holdings. It trades about 0.1 of its potential returns per unit of risk. Ryanair Holdings plc is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  142,800  in Ryanair Holdings plc on September 22, 2024 and sell it today you would earn a total of  16,900  from holding Ryanair Holdings plc or generate 11.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	97.67%
Values	Daily Returns

Federal Realty Investment  vs.  Ryanair Holdings plc

Federal Realty Investment

Risk-Adjusted Performance

0 of 100

Very Weak

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

Ryanair Holdings plc

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ryanair Holdings plc are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain essential indicators, Ryanair Holdings disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Federal Realty and Ryanair Holdings

The main advantage of trading using opposite Federal Realty and Ryanair Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federal Realty 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 Federal Realty Investment 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.