Correlation Between Air New and Wizz Air
Can any of the company-specific risk be diversified away by investing in both Air New 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 Air New and Wizz Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air New Zealand and Wizz Air Holdings, you can compare the effects of market volatilities on Air New 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 Air New with a short position of Wizz Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air New and Wizz Air.
Diversification Opportunities for Air New and Wizz Air
Average diversification
The 3 months correlation between Air and Wizz is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Air New Zealand 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 Air New 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 Air New Zealand 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 Air New i.e., Air New and Wizz Air go up and down completely randomly.
Pair Corralation between Air New and Wizz Air
Assuming the 90 days horizon Air New Zealand is expected to generate 2.79 times more return on investment than Wizz Air. However, Air New is 2.79 times more volatile than Wizz Air Holdings. It trades about 0.1 of its potential returns per unit of risk. Wizz Air Holdings is currently generating about -0.31 per unit of risk. If you would invest 29.00 in Air New Zealand on September 12, 2024 and sell it today you would earn a total of 3.00 from holding Air New Zealand or generate 10.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air New Zealand vs. Wizz Air Holdings
Performance |
| Timeline |
| Air New Zealand |
| Wizz Air Holdings |
Air New and Wizz Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air New and Wizz Air
The main advantage of trading using opposite Air New and Wizz Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air New 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.| Air New vs. Finnair Oyj | Air New vs. easyJet plc | Air New vs. Norse Atlantic ASA | Air New vs. Air China Limited |
| Wizz Air vs. Finnair Oyj | Wizz Air vs. easyJet plc | Wizz Air vs. Norse Atlantic ASA | Wizz Air vs. Air New Zealand |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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