Correlation Between Wizz Air and Finnair Oyj
Can any of the company-specific risk be diversified away by investing in both Wizz Air and Finnair Oyj 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 Finnair Oyj 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 Finnair Oyj, you can compare the effects of market volatilities on Wizz Air and Finnair Oyj 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 Finnair Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wizz Air and Finnair Oyj.
Diversification Opportunities for Wizz Air and Finnair Oyj
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Wizz and Finnair is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Wizz Air Holdings and Finnair Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Finnair Oyj 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 Finnair Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Finnair Oyj has no effect on the direction of Wizz Air i.e., Wizz Air and Finnair Oyj go up and down completely randomly.
Pair Corralation between Wizz Air and Finnair Oyj
Assuming the 90 days horizon Wizz Air Holdings is expected to under-perform the Finnair Oyj. But the pink sheet apears to be less risky and, when comparing its historical volatility, Wizz Air Holdings is 6.72 times less risky than Finnair Oyj. The pink sheet trades about -0.03 of its potential returns per unit of risk. The Finnair Oyj is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 600.00 in Finnair Oyj on September 12, 2024 and sell it today you would lose (375.00) from holding Finnair Oyj or give up 62.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Wizz Air Holdings vs. Finnair Oyj
Performance |
| Timeline |
| Wizz Air Holdings |
| Finnair Oyj |
Wizz Air and Finnair Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wizz Air and Finnair Oyj
The main advantage of trading using opposite Wizz Air and Finnair Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wizz Air position performs unexpectedly, Finnair Oyj 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 Finnair Oyj will offset losses from the drop in Finnair Oyj's long position.| Wizz Air vs. Finnair Oyj | Wizz Air vs. easyJet plc | Wizz Air vs. Norse Atlantic ASA | Wizz Air vs. Air New Zealand |
| Finnair Oyj vs. easyJet plc | Finnair Oyj vs. Norse Atlantic ASA | Finnair Oyj vs. Air New Zealand | Finnair Oyj vs. Air China Limited |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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