Correlation Between Wizz Air and FuelCell Energy

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

Diversification Opportunities for Wizz Air and FuelCell Energy

-0.33

Correlation Coefficient

Wizz Air  FuelCell Energy

Very good diversification

The 3 months correlation between Wizz and FuelCell is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Wizz Air Holdings and FuelCell Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FuelCell Energy 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 FuelCell Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FuelCell Energy has no effect on the direction of Wizz Air i.e., Wizz Air and FuelCell Energy go up and down completely randomly.

Pair Corralation between Wizz Air and FuelCell Energy

Assuming the 90 days trading horizon Wizz Air Holdings is expected to generate 0.58 times more return on investment than FuelCell Energy. However, Wizz Air Holdings is 1.73 times less risky than FuelCell Energy. It trades about 0.14 of its potential returns per unit of risk. FuelCell Energy is currently generating about -0.09 per unit of risk. If you would invest  125,700  in Wizz Air Holdings on December 3, 2024 and sell it today you would earn a total of  41,300  from holding Wizz Air Holdings or generate 32.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	64.52%
Values	Daily Returns

Wizz Air Holdings  vs.  FuelCell Energy

Wizz Air Holdings

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Wizz Air Holdings are ranked lower than 10 (%) 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.

FuelCell Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days FuelCell Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Wizz Air and FuelCell Energy

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

The idea behind Wizz Air Holdings and FuelCell Energy 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.