Correlation Between Wizz Air and Spotify Technology
Can any of the company-specific risk be diversified away by investing in both Wizz Air and Spotify Technology 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 Spotify Technology 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 Spotify Technology SA, you can compare the effects of market volatilities on Wizz Air and Spotify Technology 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 Spotify Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wizz Air and Spotify Technology.
Diversification Opportunities for Wizz Air and Spotify Technology
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Wizz and Spotify is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Wizz Air Holdings and Spotify Technology SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spotify Technology 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 Spotify Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spotify Technology has no effect on the direction of Wizz Air i.e., Wizz Air and Spotify Technology go up and down completely randomly.
Pair Corralation between Wizz Air and Spotify Technology
Assuming the 90 days trading horizon Wizz Air Holdings is expected to under-perform the Spotify Technology. In addition to that, Wizz Air is 1.53 times more volatile than Spotify Technology SA. It trades about -0.1 of its total potential returns per unit of risk. Spotify Technology SA is currently generating about 0.13 per unit of volatility. If you would invest 29,570 in Spotify Technology SA on October 13, 2024 and sell it today you would earn a total of 15,700 from holding Spotify Technology SA or generate 53.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.32% |
| Values | Daily Returns |
Wizz Air Holdings vs. Spotify Technology SA
Performance |
| Timeline |
| Wizz Air Holdings |
| Spotify Technology |
Wizz Air and Spotify Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wizz Air and Spotify Technology
The main advantage of trading using opposite Wizz Air and Spotify Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wizz Air position performs unexpectedly, Spotify Technology 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 Spotify Technology will offset losses from the drop in Spotify Technology's long position.| Wizz Air vs. Tatton Asset Management | Wizz Air vs. Ebro Foods | Wizz Air vs. Premier Foods PLC | Wizz Air vs. Eastman Chemical Co |
| Spotify Technology vs. Tavistock Investments Plc | Spotify Technology vs. Caledonia Investments | Spotify Technology vs. Wizz Air Holdings | Spotify Technology vs. Gear4music Plc |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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