Correlation Between Wizz Air and X-FAB Silicon
Can any of the company-specific risk be diversified away by investing in both Wizz Air and X-FAB Silicon 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 X-FAB Silicon 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 X FAB Silicon Foundries, you can compare the effects of market volatilities on Wizz Air and X-FAB Silicon 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 X-FAB Silicon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wizz Air and X-FAB Silicon.
Diversification Opportunities for Wizz Air and X-FAB Silicon
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Wizz and X-FAB is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Wizz Air Holdings and X FAB Silicon Foundries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on X FAB Silicon 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 X-FAB Silicon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of X FAB Silicon has no effect on the direction of Wizz Air i.e., Wizz Air and X-FAB Silicon go up and down completely randomly.
Pair Corralation between Wizz Air and X-FAB Silicon
Assuming the 90 days trading horizon Wizz Air Holdings is expected to generate 1.5 times more return on investment than X-FAB Silicon. However, Wizz Air is 1.5 times more volatile than X FAB Silicon Foundries. It trades about 0.12 of its potential returns per unit of risk. X FAB Silicon Foundries is currently generating about 0.05 per unit of risk. If you would invest 1,702 in Wizz Air Holdings on November 27, 2024 and sell it today you would earn a total of 177.00 from holding Wizz Air Holdings or generate 10.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wizz Air Holdings vs. X FAB Silicon Foundries
Performance |
| Timeline |
| Wizz Air Holdings |
| X FAB Silicon |
Wizz Air and X-FAB Silicon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wizz Air and X-FAB Silicon
The main advantage of trading using opposite Wizz Air and X-FAB Silicon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wizz Air position performs unexpectedly, X-FAB Silicon 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 X-FAB Silicon will offset losses from the drop in X-FAB Silicon's long position.| Wizz Air vs. GREENX METALS LTD | Wizz Air vs. Daido Steel Co | Wizz Air vs. De Grey Mining | Wizz Air vs. Dentsply Sirona |
| X-FAB Silicon vs. Mount Gibson Iron | X-FAB Silicon vs. Tianjin Capital Environmental | X-FAB Silicon vs. GLG LIFE TECH | X-FAB Silicon vs. Khiron Life Sciences |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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