Correlation Between Intermediate Capital and Wizz Air

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

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

Diversification Opportunities for Intermediate Capital and Wizz Air

0.12

Correlation Coefficient

Intermediate Capital  Wizz Air

Average diversification

The 3 months correlation between Intermediate and Wizz is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Intermediate Capital 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 Intermediate Capital 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 Intermediate Capital 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 Intermediate Capital i.e., Intermediate Capital and Wizz Air go up and down completely randomly.

Pair Corralation between Intermediate Capital and Wizz Air

Assuming the 90 days trading horizon Intermediate Capital Group is expected to under-perform the Wizz Air. But the stock apears to be less risky and, when comparing its historical volatility, Intermediate Capital Group is 1.85 times less risky than Wizz Air. The stock trades about -0.01 of its potential returns per unit of risk. The Wizz Air Holdings is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  119,000  in Wizz Air Holdings on September 13, 2024 and sell it today you would earn a total of  23,200  from holding Wizz Air Holdings or generate 19.5% return on investment over 90 days.

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

Intermediate Capital Group  vs.  Wizz Air Holdings

Intermediate Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Intermediate Capital Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Intermediate Capital 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

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Wizz Air Holdings are ranked lower than 7 (%) 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 Intermediate Capital and Wizz Air

The main advantage of trading using opposite Intermediate Capital and Wizz Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intermediate Capital 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 Intermediate Capital 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.