Correlation Between KAUFMAN ET and Wizz Air
Can any of the company-specific risk be diversified away by investing in both KAUFMAN ET 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 KAUFMAN ET and Wizz Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KAUFMAN ET BROAD and Wizz Air Holdings, you can compare the effects of market volatilities on KAUFMAN ET 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 KAUFMAN ET with a short position of Wizz Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of KAUFMAN ET and Wizz Air.
Diversification Opportunities for KAUFMAN ET and Wizz Air
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between KAUFMAN and Wizz is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding KAUFMAN ET BROAD 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 KAUFMAN ET 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 KAUFMAN ET BROAD 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 KAUFMAN ET i.e., KAUFMAN ET and Wizz Air go up and down completely randomly.
Pair Corralation between KAUFMAN ET and Wizz Air
Assuming the 90 days trading horizon KAUFMAN ET BROAD is expected to under-perform the Wizz Air. But the stock apears to be less risky and, when comparing its historical volatility, KAUFMAN ET BROAD is 2.85 times less risky than Wizz Air. The stock trades about -0.23 of its potential returns per unit of risk. The Wizz Air Holdings is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 1,592 in Wizz Air Holdings on August 25, 2024 and sell it today you would lose (40.00) from holding Wizz Air Holdings or give up 2.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KAUFMAN ET BROAD vs. Wizz Air Holdings
Performance |
| Timeline |
| KAUFMAN ET BROAD |
| Wizz Air Holdings |
KAUFMAN ET and Wizz Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KAUFMAN ET and Wizz Air
The main advantage of trading using opposite KAUFMAN ET and Wizz Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KAUFMAN ET 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.The idea behind KAUFMAN ET BROAD and Wizz Air Holdings 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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