Correlation Between Wizz Air and Highlight Communications
Can any of the company-specific risk be diversified away by investing in both Wizz Air and Highlight Communications 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 Wizz Air and Highlight Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wizz Air Holdings and Highlight Communications AG, you can compare the effects of market volatilities on Wizz Air and Highlight Communications 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 Wizz Air with a short position of Highlight Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wizz Air and Highlight Communications.
Diversification Opportunities for Wizz Air and Highlight Communications
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Wizz and Highlight is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Wizz Air Holdings and Highlight Communications AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highlight Communications and Wizz Air 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 Wizz Air Holdings are associated (or correlated) with Highlight Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Highlight Communications has no effect on the direction of Wizz Air i.e., Wizz Air and Highlight Communications go up and down completely randomly.
Pair Corralation between Wizz Air and Highlight Communications
Assuming the 90 days trading horizon Wizz Air Holdings is expected to generate 1.05 times more return on investment than Highlight Communications. However, Wizz Air is 1.05 times more volatile than Highlight Communications AG. It trades about -0.02 of its potential returns per unit of risk. Highlight Communications AG is currently generating about -0.05 per unit of risk. If you would invest 2,351 in Wizz Air Holdings on October 29, 2024 and sell it today you would lose (637.00) from holding Wizz Air Holdings or give up 27.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Wizz Air Holdings vs. Highlight Communications AG
Performance |
| Timeline |
| Wizz Air Holdings |
| Highlight Communications |
Wizz Air and Highlight Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wizz Air and Highlight Communications
The main advantage of trading using opposite Wizz Air and Highlight Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wizz Air position performs unexpectedly, Highlight Communications 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 Highlight Communications will offset losses from the drop in Highlight Communications' long position.| Wizz Air vs. Virtus Investment Partners | Wizz Air vs. ECHO INVESTMENT ZY | Wizz Air vs. MidCap Financial Investment | Wizz Air vs. Cars Inc |
| Highlight Communications vs. Beta Systems Software | Highlight Communications vs. PACIFIC ONLINE | Highlight Communications vs. Japan Tobacco | Highlight Communications vs. GungHo Online Entertainment |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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