Correlation Between Cairn Homes and Wizz Air
Can any of the company-specific risk be diversified away by investing in both Cairn Homes 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 Cairn Homes and Wizz Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cairn Homes PLC and Wizz Air Holdings, you can compare the effects of market volatilities on Cairn Homes 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 Cairn Homes with a short position of Wizz Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cairn Homes and Wizz Air.
Diversification Opportunities for Cairn Homes and Wizz Air
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cairn and Wizz is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Cairn Homes 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 Cairn Homes 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 Cairn Homes 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 Cairn Homes i.e., Cairn Homes and Wizz Air go up and down completely randomly.
Pair Corralation between Cairn Homes and Wizz Air
Assuming the 90 days trading horizon Cairn Homes PLC is expected to generate 0.55 times more return on investment than Wizz Air. However, Cairn Homes PLC is 1.82 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 -0.03 per unit of risk. If you would invest 7,769 in Cairn Homes PLC on October 28, 2024 and sell it today you would earn a total of 10,111 from holding Cairn Homes PLC or generate 130.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Cairn Homes PLC vs. Wizz Air Holdings
Performance |
| Timeline |
| Cairn Homes PLC |
| Wizz Air Holdings |
Cairn Homes and Wizz Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cairn Homes and Wizz Air
The main advantage of trading using opposite Cairn Homes and Wizz Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cairn Homes 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.| Cairn Homes vs. Systemair AB | Cairn Homes vs. Litigation Capital Management | Cairn Homes vs. Sovereign Metals | Cairn Homes vs. Fulcrum Metals PLC |
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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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