Correlation Between IShares Physical and Wizz Air

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

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

Diversification Opportunities for IShares Physical and Wizz Air

-0.35

Correlation Coefficient

IShares Physical  Wizz Air

Very good diversification

The 3 months correlation between IShares and Wizz is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding iShares Physical Silver 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 IShares Physical 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 iShares Physical Silver 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 IShares Physical i.e., IShares Physical and Wizz Air go up and down completely randomly.

Pair Corralation between IShares Physical and Wizz Air

Assuming the 90 days trading horizon iShares Physical Silver is expected to under-perform the Wizz Air. But the stock apears to be less risky and, when comparing its historical volatility, iShares Physical Silver is 2.07 times less risky than Wizz Air. The stock trades about -0.16 of its potential returns per unit of risk. The Wizz Air Holdings is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  141,300  in Wizz Air Holdings on October 11, 2024 and sell it today you would lose (8,300) from holding Wizz Air Holdings or give up 5.87% of portfolio value over 90 days.

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

iShares Physical Silver  vs.  Wizz Air Holdings

iShares Physical Silver

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares Physical Silver has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, IShares Physical is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Wizz Air Holdings

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Wizz Air Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Wizz Air may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with IShares Physical and Wizz Air

The main advantage of trading using opposite IShares Physical and Wizz Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Physical 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 iShares Physical Silver 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.