Correlation Between WIZZ AIR and Air New
Can any of the company-specific risk be diversified away by investing in both WIZZ AIR and Air New 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 Air New into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WIZZ AIR HLDGUNSPADR4 and Air New Zealand, you can compare the effects of market volatilities on WIZZ AIR and Air New 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 Air New. Check out your portfolio center. Please also check ongoing floating volatility patterns of WIZZ AIR and Air New.
Diversification Opportunities for WIZZ AIR and Air New
Average diversification
The 3 months correlation between WIZZ and Air is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding WIZZ AIR HLDGUNSPADR4 and Air New Zealand in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air New Zealand 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 HLDGUNSPADR4 are associated (or correlated) with Air New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air New Zealand has no effect on the direction of WIZZ AIR i.e., WIZZ AIR and Air New go up and down completely randomly.
Pair Corralation between WIZZ AIR and Air New
Assuming the 90 days trading horizon WIZZ AIR HLDGUNSPADR4 is expected to under-perform the Air New. In addition to that, WIZZ AIR is 2.13 times more volatile than Air New Zealand. It trades about -0.02 of its total potential returns per unit of risk. Air New Zealand is currently generating about -0.01 per unit of volatility. If you would invest 37.00 in Air New Zealand on October 12, 2024 and sell it today you would lose (5.00) from holding Air New Zealand or give up 13.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
WIZZ AIR HLDGUNSPADR4 vs. Air New Zealand
Performance |
| Timeline |
| WIZZ AIR HLDGUNSPADR4 |
| Air New Zealand |
WIZZ AIR and Air New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WIZZ AIR and Air New
The main advantage of trading using opposite WIZZ AIR and Air New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WIZZ AIR position performs unexpectedly, Air New 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 Air New will offset losses from the drop in Air New's long position.| WIZZ AIR vs. American Airlines Group | WIZZ AIR vs. Grupo Carso SAB | WIZZ AIR vs. Commercial Vehicle Group | WIZZ AIR vs. China Eastern Airlines |
| Air New vs. Kingdee International Software | Air New vs. VITEC SOFTWARE GROUP | Air New vs. Axway Software SA | Air New vs. CHINA TONTINE WINES |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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