Correlation Between Wizz Air and Tokio Marine

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

Diversification Opportunities for Wizz Air and Tokio Marine

0.04

Correlation Coefficient

Wizz Air  Tokio Marine

Significant diversification

The 3 months correlation between Wizz and Tokio is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Wizz Air Holdings and Tokio Marine Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tokio Marine Holdings 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 Tokio Marine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tokio Marine Holdings has no effect on the direction of Wizz Air i.e., Wizz Air and Tokio Marine go up and down completely randomly.

Pair Corralation between Wizz Air and Tokio Marine

Assuming the 90 days trading horizon Wizz Air Holdings is expected to under-perform the Tokio Marine. In addition to that, Wizz Air is 1.36 times more volatile than Tokio Marine Holdings. It trades about -0.03 of its total potential returns per unit of risk. Tokio Marine Holdings is currently generating about 0.08 per unit of volatility. If you would invest  2,268  in Tokio Marine Holdings on October 7, 2024 and sell it today you would earn a total of  1,235  from holding Tokio Marine Holdings or generate 54.45% return on investment over 90 days.

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

Wizz Air Holdings  vs.  Tokio Marine Holdings

Wizz Air Holdings

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Wizz Air Holdings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Wizz Air unveiled solid returns over the last few months and may actually be approaching a breakup point.

Tokio Marine Holdings

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Tokio Marine Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Tokio Marine is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Wizz Air and Tokio Marine

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

The idea behind Wizz Air Holdings and Tokio Marine 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.