Correlation Between Automatic Data and Wizz Air
Can any of the company-specific risk be diversified away by investing in both Automatic Data and Wizz Air 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 Automatic Data and Wizz Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Automatic Data Processing and Wizz Air Holdings, you can compare the effects of market volatilities on Automatic Data and Wizz Air 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 Automatic Data with a short position of Wizz Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Automatic Data and Wizz Air.
Diversification Opportunities for Automatic Data and Wizz Air
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Automatic and Wizz is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Automatic Data Processing and Wizz Air Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wizz Air Holdings and Automatic Data 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 Automatic Data Processing are associated (or correlated) with Wizz Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wizz Air Holdings has no effect on the direction of Automatic Data i.e., Automatic Data and Wizz Air go up and down completely randomly.
Pair Corralation between Automatic Data and Wizz Air
Assuming the 90 days trading horizon Automatic Data Processing is expected to generate 0.25 times more return on investment than Wizz Air. However, Automatic Data Processing is 4.07 times less risky than Wizz Air. It trades about -0.18 of its potential returns per unit of risk. Wizz Air Holdings is currently generating about -0.08 per unit of risk. If you would invest 29,951 in Automatic Data Processing on October 11, 2024 and sell it today you would lose (929.00) from holding Automatic Data Processing or give up 3.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Automatic Data Processing vs. Wizz Air Holdings
Performance |
| Timeline |
| Automatic Data Processing |
| Wizz Air Holdings |
Automatic Data and Wizz Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Automatic Data and Wizz Air
The main advantage of trading using opposite Automatic Data and Wizz Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Automatic Data position performs unexpectedly, Wizz Air 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 Wizz Air will offset losses from the drop in Wizz Air's long position.| Automatic Data vs. Compal Electronics GDR | Automatic Data vs. Vitec Software Group | Automatic Data vs. Arrow Electronics | Automatic Data vs. Axway Software SA |
| Wizz Air vs. Prosiebensat 1 Media | Wizz Air vs. G5 Entertainment AB | Wizz Air vs. iShares Physical Silver | Wizz Air vs. Lundin Mining Corp |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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