Correlation Between Wizz Air and SoftBank Group
Can any of the company-specific risk be diversified away by investing in both Wizz Air and SoftBank Group 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 SoftBank Group 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 SoftBank Group Corp, you can compare the effects of market volatilities on Wizz Air and SoftBank Group 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 SoftBank Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wizz Air and SoftBank Group.
Diversification Opportunities for Wizz Air and SoftBank Group
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Wizz and SoftBank is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Wizz Air Holdings and SoftBank Group Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SoftBank Group Corp 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 SoftBank Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SoftBank Group Corp has no effect on the direction of Wizz Air i.e., Wizz Air and SoftBank Group go up and down completely randomly.
Pair Corralation between Wizz Air and SoftBank Group
Assuming the 90 days trading horizon Wizz Air Holdings is expected to generate 1.78 times more return on investment than SoftBank Group. However, Wizz Air is 1.78 times more volatile than SoftBank Group Corp. It trades about 0.26 of its potential returns per unit of risk. SoftBank Group Corp is currently generating about -0.31 per unit of risk. If you would invest 123,800 in Wizz Air Holdings on December 4, 2024 and sell it today you would earn a total of 33,500 from holding Wizz Air Holdings or generate 27.06% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 66.67% |
Values | Daily Returns |
Wizz Air Holdings vs. SoftBank Group Corp
Performance |
Timeline |
Wizz Air Holdings |
SoftBank Group Corp |
Wizz Air and SoftBank Group Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Wizz Air and SoftBank Group
The main advantage of trading using opposite Wizz Air and SoftBank Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wizz Air position performs unexpectedly, SoftBank Group 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 SoftBank Group will offset losses from the drop in SoftBank Group's long position.Wizz Air vs. Verizon Communications | Wizz Air vs. Charter Communications Cl | Wizz Air vs. Aeorema Communications Plc | Wizz Air vs. Universal Display Corp |
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Check out your portfolio center.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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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