Correlation Between XPO Logistics and Ryanair Holdings

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

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

Diversification Opportunities for XPO Logistics and Ryanair Holdings

0.21

Correlation Coefficient

XPO Logistics  Ryanair Holdings

Modest diversification

The 3 months correlation between XPO and Ryanair is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding XPO Logistics 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 XPO Logistics 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 XPO Logistics 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 XPO Logistics i.e., XPO Logistics and Ryanair Holdings go up and down completely randomly.

Pair Corralation between XPO Logistics and Ryanair Holdings

Considering the 90-day investment horizon XPO Logistics is expected to under-perform the Ryanair Holdings. In addition to that, XPO Logistics is 1.37 times more volatile than Ryanair Holdings PLC. It trades about -0.19 of its total potential returns per unit of risk. Ryanair Holdings PLC is currently generating about -0.04 per unit of volatility. If you would invest  4,248  in Ryanair Holdings PLC on January 9, 2025 and sell it today you would lose (282.00) from holding Ryanair Holdings PLC or give up 6.64% of portfolio value over 90 days.

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

XPO Logistics  vs.  Ryanair Holdings PLC

XPO Logistics

Risk-Adjusted Performance

Very Weak

Over the last 90 days XPO Logistics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in May 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Ryanair Holdings PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ryanair Holdings PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Ryanair Holdings is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with XPO Logistics and Ryanair Holdings

The main advantage of trading using opposite XPO Logistics and Ryanair Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if XPO Logistics 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 XPO Logistics 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.