Correlation Between Cars and Wizz Air
Can any of the company-specific risk be diversified away by investing in both Cars 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 Cars and Wizz Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cars Inc and Wizz Air Holdings, you can compare the effects of market volatilities on Cars 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 Cars with a short position of Wizz Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cars and Wizz Air.
Diversification Opportunities for Cars and Wizz Air
Good diversification
The 3 months correlation between Cars and Wizz is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Cars Inc 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 Cars 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 Cars Inc 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 Cars i.e., Cars and Wizz Air go up and down completely randomly.
Pair Corralation between Cars and Wizz Air
Assuming the 90 days horizon Cars Inc is expected to generate 0.68 times more return on investment than Wizz Air. However, Cars Inc is 1.46 times less risky than Wizz Air. It trades about 0.02 of its potential returns per unit of risk. Wizz Air Holdings is currently generating about -0.04 per unit of risk. If you would invest 1,720 in Cars Inc on November 7, 2024 and sell it today you would earn a total of 60.00 from holding Cars Inc or generate 3.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.2% |
| Values | Daily Returns |
Cars Inc vs. Wizz Air Holdings
Performance |
| Timeline |
| Cars Inc |
| Wizz Air Holdings |
Cars and Wizz Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cars and Wizz Air
The main advantage of trading using opposite Cars and Wizz Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cars 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.| Cars vs. SWISS WATER DECAFFCOFFEE | Cars vs. Singapore Telecommunications Limited | Cars vs. Lattice Semiconductor | Cars vs. TOREX SEMICONDUCTOR LTD |
| Wizz Air vs. Broadwind | Wizz Air vs. EVS Broadcast Equipment | Wizz Air vs. Gaztransport Technigaz SA | Wizz Air vs. GOLD ROAD RES |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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