Correlation Between Wizz Air and Japan Real

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

Diversification Opportunities for Wizz Air and Japan Real

-0.48

Correlation Coefficient

Wizz Air  Japan Real

Very good diversification

The 3 months correlation between Wizz and Japan is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Wizz Air Holdings and Japan Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Japan Real Estate 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 Japan Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Japan Real Estate has no effect on the direction of Wizz Air i.e., Wizz Air and Japan Real go up and down completely randomly.

Pair Corralation between Wizz Air and Japan Real

Assuming the 90 days trading horizon Wizz Air Holdings is expected to generate 3.59 times more return on investment than Japan Real. However, Wizz Air is 3.59 times more volatile than Japan Real Estate. It trades about 0.02 of its potential returns per unit of risk. Japan Real Estate is currently generating about -0.02 per unit of risk. If you would invest  1,522  in Wizz Air Holdings on September 2, 2024 and sell it today you would earn a total of  20.00  from holding Wizz Air Holdings or generate 1.31% return on investment over 90 days.

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

Wizz Air Holdings  vs.  Japan Real Estate

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.

Japan Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Japan Real Estate has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Japan Real is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Wizz Air and Japan Real

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

The idea behind Wizz Air Holdings and Japan Real Estate 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.