Correlation Between Wizz Air and Goodyear Tire

Can any of the company-specific risk be diversified away by investing in both Wizz Air and Goodyear Tire 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 Goodyear Tire 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 The Goodyear Tire, you can compare the effects of market volatilities on Wizz Air and Goodyear Tire 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 Goodyear Tire. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wizz Air and Goodyear Tire.

Diversification Opportunities for Wizz Air and Goodyear Tire

0.28

Correlation Coefficient

Wizz Air  Goodyear Tire

Modest diversification

The 3 months correlation between Wizz and Goodyear is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Wizz Air Holdings and The Goodyear Tire in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goodyear Tire 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 Goodyear Tire. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goodyear Tire has no effect on the direction of Wizz Air i.e., Wizz Air and Goodyear Tire go up and down completely randomly.

Pair Corralation between Wizz Air and Goodyear Tire

Assuming the 90 days trading horizon Wizz Air Holdings is expected to under-perform the Goodyear Tire. In addition to that, Wizz Air is 1.07 times more volatile than The Goodyear Tire. It trades about -0.01 of its total potential returns per unit of risk. The Goodyear Tire is currently generating about 0.0 per unit of volatility. If you would invest  1,021  in The Goodyear Tire on September 28, 2024 and sell it today you would lose (200.00) from holding The Goodyear Tire or give up 19.59% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Wizz Air Holdings  vs.  The Goodyear Tire

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 newest stock price uproar, may contribute to short-horizon losses for the private investors.

Goodyear Tire

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in The Goodyear Tire are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Goodyear Tire may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Wizz Air and Goodyear Tire

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

The idea behind Wizz Air Holdings and The Goodyear Tire 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.