Correlation Between EasyJet Plc and Wizz Air
Can any of the company-specific risk be diversified away by investing in both EasyJet Plc 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 EasyJet Plc and Wizz Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between easyJet plc and Wizz Air Holdings, you can compare the effects of market volatilities on EasyJet Plc 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 EasyJet Plc with a short position of Wizz Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of EasyJet Plc and Wizz Air.
Diversification Opportunities for EasyJet Plc and Wizz Air
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between EasyJet and Wizz is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding easyJet 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 EasyJet Plc 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 easyJet 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 EasyJet Plc i.e., EasyJet Plc and Wizz Air go up and down completely randomly.
Pair Corralation between EasyJet Plc and Wizz Air
Assuming the 90 days horizon easyJet plc is expected to generate 0.96 times more return on investment than Wizz Air. However, easyJet plc is 1.04 times less risky than Wizz Air. It trades about 0.06 of its potential returns per unit of risk. Wizz Air Holdings is currently generating about -0.01 per unit of risk. If you would invest 444.00 in easyJet plc on September 12, 2024 and sell it today you would earn a total of 322.00 from holding easyJet plc or generate 72.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 74.9% |
| Values | Daily Returns |
easyJet plc vs. Wizz Air Holdings
Performance |
| Timeline |
| easyJet plc |
| Wizz Air Holdings |
EasyJet Plc and Wizz Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EasyJet Plc and Wizz Air
The main advantage of trading using opposite EasyJet Plc and Wizz Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EasyJet Plc 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.| EasyJet Plc vs. Finnair Oyj | EasyJet Plc vs. Norse Atlantic ASA | EasyJet Plc vs. Air New Zealand | EasyJet Plc 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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