Correlation Between Wizz Air and Toyota
Can any of the company-specific risk be diversified away by investing in both Wizz Air and Toyota 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 Toyota 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 Toyota Motor Corp, you can compare the effects of market volatilities on Wizz Air and Toyota 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 Toyota. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wizz Air and Toyota.
Diversification Opportunities for Wizz Air and Toyota
Poor diversification
The 3 months correlation between Wizz and Toyota is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Wizz Air Holdings and Toyota Motor Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Toyota Motor Corp 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 Toyota. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Toyota Motor Corp has no effect on the direction of Wizz Air i.e., Wizz Air and Toyota go up and down completely randomly.
Pair Corralation between Wizz Air and Toyota
Assuming the 90 days trading horizon Wizz Air Holdings is expected to generate 2.47 times more return on investment than Toyota. However, Wizz Air is 2.47 times more volatile than Toyota Motor Corp. It trades about 0.12 of its potential returns per unit of risk. Toyota Motor Corp is currently generating about 0.01 per unit of risk. If you would invest 143,300 in Wizz Air Holdings on September 13, 2024 and sell it today you would earn a total of 11,900 from holding Wizz Air Holdings or generate 8.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wizz Air Holdings vs. Toyota Motor Corp
Performance |
| Timeline |
| Wizz Air Holdings |
| Toyota Motor Corp |
Wizz Air and Toyota Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wizz Air and Toyota
The main advantage of trading using opposite Wizz Air and Toyota positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wizz Air position performs unexpectedly, Toyota 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 Toyota will offset losses from the drop in Toyota's long position.| Wizz Air vs. Catalyst Media Group | Wizz Air vs. Roebuck Food Group | Wizz Air vs. MediaZest plc | Wizz Air vs. JD Sports Fashion |
| Toyota vs. Eco Animal Health | Toyota vs. Cardinal Health | Toyota vs. Ecclesiastical Insurance Office | Toyota vs. CVS Health Corp |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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