Correlation Between Finnair Oyj and Wizz Air
Can any of the company-specific risk be diversified away by investing in both Finnair Oyj 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 Finnair Oyj and Wizz Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Finnair Oyj and Wizz Air Holdings, you can compare the effects of market volatilities on Finnair Oyj 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 Finnair Oyj with a short position of Wizz Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Finnair Oyj and Wizz Air.
Diversification Opportunities for Finnair Oyj and Wizz Air
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Finnair and Wizz is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Finnair Oyj 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 Finnair Oyj 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 Finnair Oyj 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 Finnair Oyj i.e., Finnair Oyj and Wizz Air go up and down completely randomly.
Pair Corralation between Finnair Oyj and Wizz Air
Assuming the 90 days horizon Finnair Oyj is expected to generate 5.34 times more return on investment than Wizz Air. However, Finnair Oyj is 5.34 times more volatile than Wizz Air Holdings. It trades about 0.02 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 729.00 in Finnair Oyj on September 12, 2024 and sell it today you would lose (504.00) from holding Finnair Oyj or give up 69.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Finnair Oyj vs. Wizz Air Holdings
Performance |
| Timeline |
| Finnair Oyj |
| Wizz Air Holdings |
Finnair Oyj and Wizz Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Finnair Oyj and Wizz Air
The main advantage of trading using opposite Finnair Oyj and Wizz Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Finnair Oyj 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.| Finnair Oyj vs. easyJet plc | Finnair Oyj vs. Norse Atlantic ASA | Finnair Oyj vs. Air New Zealand | Finnair Oyj 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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