Correlation Between Wizz Air and Advanced Medical
Can any of the company-specific risk be diversified away by investing in both Wizz Air and Advanced Medical 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 Advanced Medical 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 Advanced Medical Solutions, you can compare the effects of market volatilities on Wizz Air and Advanced Medical 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 Advanced Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wizz Air and Advanced Medical.
Diversification Opportunities for Wizz Air and Advanced Medical
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Wizz and Advanced is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Wizz Air Holdings and Advanced Medical Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Medical Sol 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 Advanced Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Medical Sol has no effect on the direction of Wizz Air i.e., Wizz Air and Advanced Medical go up and down completely randomly.
Pair Corralation between Wizz Air and Advanced Medical
Assuming the 90 days trading horizon Wizz Air Holdings is expected to generate 1.94 times more return on investment than Advanced Medical. However, Wizz Air is 1.94 times more volatile than Advanced Medical Solutions. It trades about -0.08 of its potential returns per unit of risk. Advanced Medical Solutions is currently generating about -0.26 per unit of risk. If you would invest 141,300 in Wizz Air Holdings on October 11, 2024 and sell it today you would lose (8,300) from holding Wizz Air Holdings or give up 5.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wizz Air Holdings vs. Advanced Medical Solutions
Performance |
| Timeline |
| Wizz Air Holdings |
| Advanced Medical Sol |
Wizz Air and Advanced Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wizz Air and Advanced Medical
The main advantage of trading using opposite Wizz Air and Advanced Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wizz Air position performs unexpectedly, Advanced Medical 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 Advanced Medical will offset losses from the drop in Advanced Medical's long position.| Wizz Air vs. SMA Solar Technology | Wizz Air vs. Take Two Interactive Software | Wizz Air vs. Micron Technology | Wizz Air vs. Applied Materials |
| Advanced Medical vs. Wizz Air Holdings | Advanced Medical vs. Sealed Air Corp | Advanced Medical vs. Amedeo Air Four | Advanced Medical vs. Systemair AB |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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