Correlation Between Ryanair Holdings and Northern Stock

Can any of the company-specific risk be diversified away by investing in both Ryanair Holdings and Northern Stock 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 Northern Stock 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 Northern Stock Index, you can compare the effects of market volatilities on Ryanair Holdings and Northern Stock 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 Northern Stock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ryanair Holdings and Northern Stock.

Diversification Opportunities for Ryanair Holdings and Northern Stock

0.56

Correlation Coefficient

Ryanair Holdings  Northern Stock

Very weak diversification

The 3 months correlation between Ryanair and Northern is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Ryanair Holdings PLC and Northern Stock Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Stock Index 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 Northern Stock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Stock Index has no effect on the direction of Ryanair Holdings i.e., Ryanair Holdings and Northern Stock go up and down completely randomly.

Pair Corralation between Ryanair Holdings and Northern Stock

Assuming the 90 days horizon Ryanair Holdings PLC is expected to generate 2.66 times more return on investment than Northern Stock. However, Ryanair Holdings is 2.66 times more volatile than Northern Stock Index. It trades about 0.19 of its potential returns per unit of risk. Northern Stock Index is currently generating about 0.29 per unit of risk. If you would invest  5,033  in Ryanair Holdings PLC on May 6, 2025 and sell it today you would earn a total of  1,179  from holding Ryanair Holdings PLC or generate 23.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Ryanair Holdings PLC  vs.  Northern Stock Index

Ryanair Holdings PLC

Risk-Adjusted Performance

Good

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

Northern Stock Index

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Northern Stock Index are ranked lower than 23 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Northern Stock showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ryanair Holdings and Northern Stock

The main advantage of trading using opposite Ryanair Holdings and Northern Stock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ryanair Holdings position performs unexpectedly, Northern Stock 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 Northern Stock will offset losses from the drop in Northern Stock's long position.

The idea behind Ryanair Holdings PLC and Northern Stock Index 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 AI Portfolio Prophet module to use AI to generate optimal portfolios and find profitable investment opportunities.