Correlation Between WIZZ AIR and SMA Solar

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

By analyzing existing cross correlation between WIZZ AIR HLDGUNSPADR4 and SMA Solar Technology, you can compare the effects of market volatilities on WIZZ AIR and SMA Solar 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 SMA Solar. Check out your portfolio center. Please also check ongoing floating volatility patterns of WIZZ AIR and SMA Solar.

Diversification Opportunities for WIZZ AIR and SMA Solar

-0.17

Correlation Coefficient

WIZZ AIR  SMA Solar

Good diversification

The 3 months correlation between WIZZ and SMA is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding WIZZ AIR HLDGUNSPADR4 and SMA Solar Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SMA Solar Technology 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 HLDGUNSPADR4 are associated (or correlated) with SMA Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SMA Solar Technology has no effect on the direction of WIZZ AIR i.e., WIZZ AIR and SMA Solar go up and down completely randomly.

Pair Corralation between WIZZ AIR and SMA Solar

Assuming the 90 days trading horizon WIZZ AIR HLDGUNSPADR4 is expected to generate 1.01 times more return on investment than SMA Solar. However, WIZZ AIR is 1.01 times more volatile than SMA Solar Technology. It trades about 0.06 of its potential returns per unit of risk. SMA Solar Technology is currently generating about -0.01 per unit of risk. If you would invest  364.00  in WIZZ AIR HLDGUNSPADR4 on October 11, 2024 and sell it today you would earn a total of  42.00  from holding WIZZ AIR HLDGUNSPADR4 or generate 11.54% return on investment over 90 days.

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

WIZZ AIR HLDGUNSPADR4  vs.  SMA Solar Technology

WIZZ AIR HLDGUNSPADR4

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in WIZZ AIR HLDGUNSPADR4 are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, WIZZ AIR reported solid returns over the last few months and may actually be approaching a breakup point.

SMA Solar Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SMA Solar Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, SMA Solar is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with WIZZ AIR and SMA Solar

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

The idea behind WIZZ AIR HLDGUNSPADR4 and SMA Solar Technology 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..