Correlation Between JAPAN AIRLINES and WIZZ AIR

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Can any of the company-specific risk be diversified away by investing in both JAPAN AIRLINES 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 JAPAN AIRLINES and WIZZ AIR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JAPAN AIRLINES and WIZZ AIR HLDGUNSPADR4, you can compare the effects of market volatilities on JAPAN AIRLINES 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 JAPAN AIRLINES with a short position of WIZZ AIR. Check out your portfolio center. Please also check ongoing floating volatility patterns of JAPAN AIRLINES and WIZZ AIR.

Diversification Opportunities for JAPAN AIRLINES and WIZZ AIR

JAPANWIZZDiversified AwayJAPANWIZZDiversified Away100%
0.28
  Correlation Coefficient

Modest diversification

The 3 months correlation between JAPAN and WIZZ is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding JAPAN AIRLINES 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 JAPAN AIRLINES 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 JAPAN AIRLINES 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 JAPAN AIRLINES i.e., JAPAN AIRLINES and WIZZ AIR go up and down completely randomly.

Pair Corralation between JAPAN AIRLINES and WIZZ AIR

Assuming the 90 days trading horizon JAPAN AIRLINES is expected to generate 4.36 times less return on investment than WIZZ AIR. But when comparing it to its historical volatility, JAPAN AIRLINES is 4.45 times less risky than WIZZ AIR. It trades about 0.04 of its potential returns per unit of risk. WIZZ AIR HLDGUNSPADR4 is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  392.00  in WIZZ AIR HLDGUNSPADR4 on October 25, 2024 and sell it today you would earn a total of  24.00  from holding WIZZ AIR HLDGUNSPADR4 or generate 6.12% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

JAPAN AIRLINES  vs.  WIZZ AIR HLDGUNSPADR4

 Performance 
JavaScript chart by amCharts 3.21.15NovDec2025 0102030
JavaScript chart by amCharts 3.21.15JAL WI20
       Timeline  
JAPAN AIRLINES 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in JAPAN AIRLINES are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound essential indicators, JAPAN AIRLINES is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan14.51515.516
WIZZ AIR HLDGUNSPADR4 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in WIZZ AIR HLDGUNSPADR4 are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, WIZZ AIR reported solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan3.63.844.24.44.64.85

JAPAN AIRLINES and WIZZ AIR Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-3.61-2.7-1.8-0.890.00.871.782.73.614.53 0.050.100.150.200.250.30
JavaScript chart by amCharts 3.21.15JAL WI20
       Returns  

Pair Trading with JAPAN AIRLINES and WIZZ AIR

The main advantage of trading using opposite JAPAN AIRLINES and WIZZ AIR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JAPAN AIRLINES 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 JAPAN AIRLINES 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.
Check out your portfolio center.
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.

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