Correlation Between WIZZ AIR and Erste Group
Can any of the company-specific risk be diversified away by investing in both WIZZ AIR and Erste Group 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 Erste Group 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 Erste Group Bank, you can compare the effects of market volatilities on WIZZ AIR and Erste Group 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 Erste Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of WIZZ AIR and Erste Group.
Diversification Opportunities for WIZZ AIR and Erste Group
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between WIZZ and Erste is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding WIZZ AIR HLDGUNSPADR4 and Erste Group Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Erste Group Bank 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 Erste Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Erste Group Bank has no effect on the direction of WIZZ AIR i.e., WIZZ AIR and Erste Group go up and down completely randomly.
Pair Corralation between WIZZ AIR and Erste Group
Assuming the 90 days trading horizon WIZZ AIR HLDGUNSPADR4 is expected to under-perform the Erste Group. In addition to that, WIZZ AIR is 2.39 times more volatile than Erste Group Bank. It trades about -0.02 of its total potential returns per unit of risk. Erste Group Bank is currently generating about 0.1 per unit of volatility. If you would invest 2,951 in Erste Group Bank on October 12, 2024 and sell it today you would earn a total of 3,047 from holding Erste Group Bank or generate 103.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.6% |
| Values | Daily Returns |
WIZZ AIR HLDGUNSPADR4 vs. Erste Group Bank
Performance |
| Timeline |
| WIZZ AIR HLDGUNSPADR4 |
| Erste Group Bank |
WIZZ AIR and Erste Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WIZZ AIR and Erste Group
The main advantage of trading using opposite WIZZ AIR and Erste Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WIZZ AIR position performs unexpectedly, Erste Group 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 Erste Group will offset losses from the drop in Erste Group'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 |
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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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