Correlation Between Northland Power and WIZZ AIR

Can any of the company-specific risk be diversified away by investing in both Northland Power and WIZZ AIR 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 Northland Power and WIZZ AIR into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Northland Power and WIZZ AIR HLDGUNSPADR4, you can compare the effects of market volatilities on Northland Power and WIZZ AIR 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 Northland Power with a short position of WIZZ AIR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northland Power and WIZZ AIR.

Diversification Opportunities for Northland Power and WIZZ AIR

-0.65

Correlation Coefficient

Northland Power  WIZZ AIR

Excellent diversification

The 3 months correlation between Northland and WIZZ is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Northland Power and WIZZ AIR HLDGUNSPADR4 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WIZZ AIR HLDGUNSPADR4 and Northland Power 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 Northland Power are associated (or correlated) with WIZZ AIR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WIZZ AIR HLDGUNSPADR4 has no effect on the direction of Northland Power i.e., Northland Power and WIZZ AIR go up and down completely randomly.

Pair Corralation between Northland Power and WIZZ AIR

Assuming the 90 days horizon Northland Power is expected to generate 0.37 times more return on investment than WIZZ AIR. However, Northland Power is 2.68 times less risky than WIZZ AIR. It trades about 0.03 of its potential returns per unit of risk. WIZZ AIR HLDGUNSPADR4 is currently generating about -0.04 per unit of risk. If you would invest  1,237  in Northland Power on October 11, 2024 and sell it today you would earn a total of  10.00  from holding Northland Power or generate 0.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	94.44%
Values	Daily Returns

Northland Power  vs.  WIZZ AIR HLDGUNSPADR4

Northland Power

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Northland Power has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

WIZZ AIR HLDGUNSPADR4

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in WIZZ AIR HLDGUNSPADR4 are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, WIZZ AIR reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Northland Power and WIZZ AIR

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

The idea behind Northland Power and WIZZ AIR HLDGUNSPADR4 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.