Correlation Between Wizz Air and CECO ENVIRONMENTAL

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

Diversification Opportunities for Wizz Air and CECO ENVIRONMENTAL

0.22

Correlation Coefficient

Wizz Air  CECO ENVIRONMENTAL

Modest diversification

The 3 months correlation between Wizz and CECO is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Wizz Air Holdings and CECO ENVIRONMENTAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CECO ENVIRONMENTAL 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 CECO ENVIRONMENTAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CECO ENVIRONMENTAL has no effect on the direction of Wizz Air i.e., Wizz Air and CECO ENVIRONMENTAL go up and down completely randomly.

Pair Corralation between Wizz Air and CECO ENVIRONMENTAL

Assuming the 90 days trading horizon Wizz Air Holdings is expected to generate 1.59 times more return on investment than CECO ENVIRONMENTAL. However, Wizz Air is 1.59 times more volatile than CECO ENVIRONMENTAL. It trades about 0.18 of its potential returns per unit of risk. CECO ENVIRONMENTAL is currently generating about -0.14 per unit of risk. If you would invest  1,548  in Wizz Air Holdings on September 28, 2024 and sell it today you would earn a total of  198.00  from holding Wizz Air Holdings or generate 12.79% return on investment over 90 days.

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

Wizz Air Holdings  vs.  CECO ENVIRONMENTAL

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.

CECO ENVIRONMENTAL

Risk-Adjusted Performance

5 of 100

Modest

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

Pair Trading with Wizz Air and CECO ENVIRONMENTAL

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

The idea behind Wizz Air Holdings and CECO ENVIRONMENTAL 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..