Correlation Between Wizz Air and Japan Tobacco
Can any of the company-specific risk be diversified away by investing in both Wizz Air and Japan Tobacco 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 Japan Tobacco 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 Japan Tobacco ADR, you can compare the effects of market volatilities on Wizz Air and Japan Tobacco 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 Japan Tobacco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wizz Air and Japan Tobacco.
Diversification Opportunities for Wizz Air and Japan Tobacco
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Wizz and Japan is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Wizz Air Holdings and Japan Tobacco ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Japan Tobacco ADR 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 Japan Tobacco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Japan Tobacco ADR has no effect on the direction of Wizz Air i.e., Wizz Air and Japan Tobacco go up and down completely randomly.
Pair Corralation between Wizz Air and Japan Tobacco
Assuming the 90 days horizon Wizz Air Holdings is expected to generate 3.07 times more return on investment than Japan Tobacco. However, Wizz Air is 3.07 times more volatile than Japan Tobacco ADR. It trades about 0.1 of its potential returns per unit of risk. Japan Tobacco ADR is currently generating about -0.13 per unit of risk. If you would invest 1,488 in Wizz Air Holdings on October 24, 2024 and sell it today you would earn a total of 282.00 from holding Wizz Air Holdings or generate 18.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.33% |
| Values | Daily Returns |
Wizz Air Holdings vs. Japan Tobacco ADR
Performance |
| Timeline |
| Wizz Air Holdings |
| Japan Tobacco ADR |
Wizz Air and Japan Tobacco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wizz Air and Japan Tobacco
The main advantage of trading using opposite Wizz Air and Japan Tobacco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wizz Air position performs unexpectedly, Japan Tobacco 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 Japan Tobacco will offset losses from the drop in Japan Tobacco's long position.| Wizz Air vs. Copa Holdings SA | Wizz Air vs. United Airlines Holdings | Wizz Air vs. Delta Air Lines | Wizz Air vs. SkyWest |
| Japan Tobacco vs. British American Tobacco | Japan Tobacco vs. Imperial Brands PLC | Japan Tobacco vs. RLX Technology | Japan Tobacco vs. British American Tobacco |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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