Correlation Between Wizz Air and SOGECLAIR

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

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

Diversification Opportunities for Wizz Air and SOGECLAIR

0.36

Correlation Coefficient

Wizz Air  SOGECLAIR

Weak diversification

The 3 months correlation between Wizz and SOGECLAIR is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Wizz Air Holdings and SOGECLAIR SA INH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOGECLAIR SA INH and Wizz Air 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 Wizz Air Holdings are associated (or correlated) with SOGECLAIR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SOGECLAIR SA INH has no effect on the direction of Wizz Air i.e., Wizz Air and SOGECLAIR go up and down completely randomly.

Pair Corralation between Wizz Air and SOGECLAIR

Assuming the 90 days trading horizon Wizz Air Holdings is expected to under-perform the SOGECLAIR. In addition to that, Wizz Air is 1.67 times more volatile than SOGECLAIR SA INH. It trades about -0.06 of its total potential returns per unit of risk. SOGECLAIR SA INH is currently generating about -0.01 per unit of volatility. If you would invest  1,870  in SOGECLAIR SA INH on September 29, 2024 and sell it today you would lose (130.00) from holding SOGECLAIR SA INH or give up 6.95% of portfolio value over 90 days.

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

Wizz Air Holdings  vs.  SOGECLAIR SA INH

Wizz Air Holdings

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Wizz Air Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Wizz Air is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

SOGECLAIR SA INH

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SOGECLAIR SA INH 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.

Pair Trading with Wizz Air and SOGECLAIR

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

The idea behind Wizz Air Holdings and SOGECLAIR SA INH 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.