Correlation Between Wizz Air and Cairn Homes
Can any of the company-specific risk be diversified away by investing in both Wizz Air and Cairn Homes 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 Cairn Homes 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 Cairn Homes PLC, you can compare the effects of market volatilities on Wizz Air and Cairn Homes 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 Cairn Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wizz Air and Cairn Homes.
Diversification Opportunities for Wizz Air and Cairn Homes
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Wizz and Cairn is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Wizz Air Holdings and Cairn Homes PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cairn Homes PLC 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 Cairn Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cairn Homes PLC has no effect on the direction of Wizz Air i.e., Wizz Air and Cairn Homes go up and down completely randomly.
Pair Corralation between Wizz Air and Cairn Homes
Assuming the 90 days trading horizon Wizz Air Holdings is expected to under-perform the Cairn Homes. In addition to that, Wizz Air is 1.98 times more volatile than Cairn Homes PLC. It trades about -0.04 of its total potential returns per unit of risk. Cairn Homes PLC is currently generating about 0.11 per unit of volatility. If you would invest 12,257 in Cairn Homes PLC on November 5, 2024 and sell it today you would earn a total of 6,583 from holding Cairn Homes PLC or generate 53.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wizz Air Holdings vs. Cairn Homes PLC
Performance |
| Timeline |
| Wizz Air Holdings |
| Cairn Homes PLC |
Wizz Air and Cairn Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wizz Air and Cairn Homes
The main advantage of trading using opposite Wizz Air and Cairn Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wizz Air position performs unexpectedly, Cairn Homes 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 Cairn Homes will offset losses from the drop in Cairn Homes' long position.| Wizz Air vs. Ecclesiastical Insurance Office | Wizz Air vs. Adriatic Metals | Wizz Air vs. bet at home AG | Wizz Air vs. Golden Metal Resources |
| Cairn Homes vs. URU Metals | Cairn Homes vs. SBM Offshore NV | Cairn Homes vs. GreenX Metals | Cairn Homes vs. Ross Stores |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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