Correlation Between Hilton Food and Wizz Air

Can any of the company-specific risk be diversified away by investing in both Hilton Food 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 Hilton Food and Wizz Air into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hilton Food Group and Wizz Air Holdings, you can compare the effects of market volatilities on Hilton Food 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 Hilton Food with a short position of Wizz Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hilton Food and Wizz Air.

Diversification Opportunities for Hilton Food and Wizz Air

0.42

Correlation Coefficient

Hilton Food  Wizz Air

Very weak diversification

The 3 months correlation between Hilton and Wizz is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Hilton Food Group and Wizz Air Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wizz Air Holdings and Hilton Food 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 Hilton Food Group 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 Holdings has no effect on the direction of Hilton Food i.e., Hilton Food and Wizz Air go up and down completely randomly.

Pair Corralation between Hilton Food and Wizz Air

Assuming the 90 days trading horizon Hilton Food Group is expected to generate 0.5 times more return on investment than Wizz Air. However, Hilton Food Group is 1.99 times less risky than Wizz Air. It trades about 0.08 of its potential returns per unit of risk. Wizz Air Holdings is currently generating about 0.0 per unit of risk. If you would invest  51,345  in Hilton Food Group on September 20, 2024 and sell it today you would earn a total of  39,755  from holding Hilton Food Group or generate 77.43% return on investment over 90 days.

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

Hilton Food Group  vs.  Wizz Air Holdings

Hilton Food Group

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hilton Food Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Hilton Food is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Wizz Air Holdings

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Wizz Air Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Wizz Air unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hilton Food and Wizz Air

The main advantage of trading using opposite Hilton Food and Wizz Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hilton Food 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 Hilton Food Group and Wizz Air Holdings 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.