Correlation Between Wizz Air and SHIMANO INC

Can any of the company-specific risk be diversified away by investing in both Wizz Air and SHIMANO INC 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 SHIMANO INC 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 SHIMANO INC UNSPADR10, you can compare the effects of market volatilities on Wizz Air and SHIMANO INC 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 SHIMANO INC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wizz Air and SHIMANO INC.

Diversification Opportunities for Wizz Air and SHIMANO INC

-0.3

Correlation Coefficient

Wizz Air  SHIMANO INC

Very good diversification

The 3 months correlation between Wizz and SHIMANO is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Wizz Air Holdings and SHIMANO INC UNSPADR10 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SHIMANO INC UNSPADR10 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 SHIMANO INC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SHIMANO INC UNSPADR10 has no effect on the direction of Wizz Air i.e., Wizz Air and SHIMANO INC go up and down completely randomly.

Pair Corralation between Wizz Air and SHIMANO INC

Assuming the 90 days trading horizon Wizz Air Holdings is expected to generate 1.29 times more return on investment than SHIMANO INC. However, Wizz Air is 1.29 times more volatile than SHIMANO INC UNSPADR10. It trades about 0.03 of its potential returns per unit of risk. SHIMANO INC UNSPADR10 is currently generating about -0.12 per unit of risk. If you would invest  1,681  in Wizz Air Holdings on September 26, 2024 and sell it today you would earn a total of  65.00  from holding Wizz Air Holdings or generate 3.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Wizz Air Holdings  vs.  SHIMANO INC UNSPADR10

Wizz Air Holdings

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Wizz Air Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Wizz Air may actually be approaching a critical reversion point that can send shares even higher in January 2025.

SHIMANO INC UNSPADR10

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SHIMANO INC UNSPADR10 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's primary indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Wizz Air and SHIMANO INC

The main advantage of trading using opposite Wizz Air and SHIMANO INC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wizz Air position performs unexpectedly, SHIMANO INC 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 SHIMANO INC will offset losses from the drop in SHIMANO INC's long position.

The idea behind Wizz Air Holdings and SHIMANO INC UNSPADR10 pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.