Correlation Between Caledonia Mining and Wizz Air
Can any of the company-specific risk be diversified away by investing in both Caledonia Mining 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 Caledonia Mining and Wizz Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caledonia Mining and Wizz Air Holdings, you can compare the effects of market volatilities on Caledonia Mining 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 Caledonia Mining with a short position of Wizz Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caledonia Mining and Wizz Air.
Diversification Opportunities for Caledonia Mining and Wizz Air
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Caledonia and Wizz is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Caledonia Mining 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 Caledonia Mining 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 Caledonia Mining 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 Caledonia Mining i.e., Caledonia Mining and Wizz Air go up and down completely randomly.
Pair Corralation between Caledonia Mining and Wizz Air
Assuming the 90 days trading horizon Caledonia Mining is expected to generate 3.64 times less return on investment than Wizz Air. But when comparing it to its historical volatility, Caledonia Mining is 3.27 times less risky than Wizz Air. It trades about 0.1 of its potential returns per unit of risk. Wizz Air Holdings is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 142,200 in Wizz Air Holdings on November 30, 2024 and sell it today you would earn a total of 24,800 from holding Wizz Air Holdings or generate 17.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Caledonia Mining vs. Wizz Air Holdings
Performance |
| Timeline |
| Caledonia Mining |
| Wizz Air Holdings |
Caledonia Mining and Wizz Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caledonia Mining and Wizz Air
The main advantage of trading using opposite Caledonia Mining and Wizz Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caledonia Mining 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.| Caledonia Mining vs. Air Products Chemicals | Caledonia Mining vs. Cardinal Health | Caledonia Mining vs. Taiwan Semiconductor Manufacturing | Caledonia Mining vs. Spire Healthcare Group |
| Wizz Air vs. OneSavings Bank PLC | Wizz Air vs. Sunny Optical Technology | Wizz Air vs. New Residential Investment | Wizz Air vs. Cognizant Technology Solutions |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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