Correlation Between Allegheny Technologies and Ryanair Holdings

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

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

Diversification Opportunities for Allegheny Technologies and Ryanair Holdings

-0.35

Correlation Coefficient

Allegheny Technologies  Ryanair Holdings

Very good diversification

The 3 months correlation between Allegheny and Ryanair is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Allegheny Technologies Incorpo 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 Allegheny Technologies 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 Allegheny Technologies Incorporated 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 Allegheny Technologies i.e., Allegheny Technologies and Ryanair Holdings go up and down completely randomly.

Pair Corralation between Allegheny Technologies and Ryanair Holdings

Considering the 90-day investment horizon Allegheny Technologies Incorporated is expected to under-perform the Ryanair Holdings. In addition to that, Allegheny Technologies is 1.18 times more volatile than Ryanair Holdings PLC. It trades about -0.06 of its total potential returns per unit of risk. Ryanair Holdings PLC is currently generating about 0.1 per unit of volatility. If you would invest  3,991  in Ryanair Holdings PLC on August 22, 2024 and sell it today you would earn a total of  511.00  from holding Ryanair Holdings PLC or generate 12.8% return on investment over 90 days.

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

Allegheny Technologies Incorpo  vs.  Ryanair Holdings PLC

Allegheny Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Allegheny Technologies Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Ryanair Holdings PLC

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ryanair Holdings PLC are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Ryanair Holdings showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Allegheny Technologies and Ryanair Holdings

The main advantage of trading using opposite Allegheny Technologies and Ryanair Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allegheny Technologies 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 Allegheny Technologies Incorporated 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.