Correlation Between Wizz Air and Nokia
Can any of the company-specific risk be diversified away by investing in both Wizz Air and Nokia 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 Nokia 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 Nokia, you can compare the effects of market volatilities on Wizz Air and Nokia 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 Nokia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wizz Air and Nokia.
Diversification Opportunities for Wizz Air and Nokia
Weak diversification
The 3 months correlation between Wizz and Nokia is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Wizz Air Holdings and Nokia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nokia 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 Nokia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nokia has no effect on the direction of Wizz Air i.e., Wizz Air and Nokia go up and down completely randomly.
Pair Corralation between Wizz Air and Nokia
Assuming the 90 days trading horizon Wizz Air is expected to generate 14.83 times less return on investment than Nokia. In addition to that, Wizz Air is 1.82 times more volatile than Nokia. It trades about 0.0 of its total potential returns per unit of risk. Nokia is currently generating about 0.07 per unit of volatility. If you would invest 315.00 in Nokia on September 14, 2024 and sell it today you would earn a total of 103.00 from holding Nokia or generate 32.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.64% |
| Values | Daily Returns |
Wizz Air Holdings vs. Nokia
Performance |
| Timeline |
| Wizz Air Holdings |
| Nokia |
Wizz Air and Nokia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wizz Air and Nokia
The main advantage of trading using opposite Wizz Air and Nokia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wizz Air position performs unexpectedly, Nokia 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 Nokia will offset losses from the drop in Nokia's long position.The idea behind Wizz Air Holdings and Nokia pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Nokia vs. Wizz Air Holdings | Nokia vs. MGIC INVESTMENT | Nokia vs. REGAL ASIAN INVESTMENTS | Nokia vs. MYFAIR GOLD P |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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