Correlation Between Ryanair Holdings and Wizz Air
Can any of the company-specific risk be diversified away by investing in both Ryanair Holdings 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 Ryanair Holdings and Wizz Air 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 Wizz Air Holdings, you can compare the effects of market volatilities on Ryanair Holdings 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 Ryanair Holdings with a short position of Wizz Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ryanair Holdings and Wizz Air.
Diversification Opportunities for Ryanair Holdings and Wizz Air
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ryanair and Wizz is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Ryanair Holdings plc 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 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 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 Ryanair Holdings i.e., Ryanair Holdings and Wizz Air go up and down completely randomly.
Pair Corralation between Ryanair Holdings and Wizz Air
Assuming the 90 days trading horizon Ryanair Holdings plc is expected to under-perform the Wizz Air. But the stock apears to be less risky and, when comparing its historical volatility, Ryanair Holdings plc is 2.98 times less risky than Wizz Air. The stock trades about -0.1 of its potential returns per unit of risk. The Wizz Air Holdings is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 144,800 in Wizz Air Holdings on November 29, 2024 and sell it today you would earn a total of 22,300 from holding Wizz Air Holdings or generate 15.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 91.3% |
| Values | Daily Returns |
Ryanair Holdings plc vs. Wizz Air Holdings
Performance |
| Timeline |
| Ryanair Holdings plc |
| Wizz Air Holdings |
Ryanair Holdings and Wizz Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ryanair Holdings and Wizz Air
The main advantage of trading using opposite Ryanair Holdings and Wizz Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ryanair Holdings 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.| Ryanair Holdings vs. Induction Healthcare Group | Ryanair Holdings vs. Aurora Investment Trust | Ryanair Holdings vs. Target Healthcare REIT | Ryanair Holdings vs. Naturhouse Health SA |
| Wizz Air vs. BW Offshore | Wizz Air vs. Alaska Air Group | Wizz Air vs. Clean Power Hydrogen | Wizz Air vs. CleanTech Lithium plc |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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