Correlation Between Wizz Air and Church Dwight

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

Diversification Opportunities for Wizz Air and Church Dwight

0.1

Correlation Coefficient

Wizz Air  Church Dwight

Average diversification

The 3 months correlation between Wizz and Church is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Wizz Air Holdings and Church Dwight Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Church Dwight 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 Church Dwight. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Church Dwight has no effect on the direction of Wizz Air i.e., Wizz Air and Church Dwight go up and down completely randomly.

Pair Corralation between Wizz Air and Church Dwight

Assuming the 90 days trading horizon Wizz Air Holdings is expected to generate 3.54 times more return on investment than Church Dwight. However, Wizz Air is 3.54 times more volatile than Church Dwight Co. It trades about 0.14 of its potential returns per unit of risk. Church Dwight Co is currently generating about 0.02 per unit of risk. If you would invest  117,000  in Wizz Air Holdings on September 14, 2024 and sell it today you would earn a total of  38,200  from holding Wizz Air Holdings or generate 32.65% return on investment over 90 days.

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

Wizz Air Holdings  vs.  Church Dwight Co

Wizz Air Holdings

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Wizz Air Holdings are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Wizz Air unveiled solid returns over the last few months and may actually be approaching a breakup point.

Church Dwight

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Church Dwight Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Church Dwight is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Wizz Air and Church Dwight

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

The idea behind Wizz Air Holdings and Church Dwight Co 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.