Correlation Between Wizz Air and Anglesey Mining

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

Diversification Opportunities for Wizz Air and Anglesey Mining

0.11

Correlation Coefficient

Wizz Air  Anglesey Mining

Average diversification

The 3 months correlation between Wizz and Anglesey is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Wizz Air Holdings and Anglesey Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anglesey Mining 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 Anglesey Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anglesey Mining has no effect on the direction of Wizz Air i.e., Wizz Air and Anglesey Mining go up and down completely randomly.

Pair Corralation between Wizz Air and Anglesey Mining

Assuming the 90 days trading horizon Wizz Air Holdings is expected to generate 0.76 times more return on investment than Anglesey Mining. However, Wizz Air Holdings is 1.32 times less risky than Anglesey Mining. It trades about -0.01 of its potential returns per unit of risk. Anglesey Mining is currently generating about -0.02 per unit of risk. If you would invest  224,800  in Wizz Air Holdings on November 20, 2024 and sell it today you would lose (57,400) from holding Wizz Air Holdings or give up 25.53% of portfolio value over 90 days.

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

Wizz Air Holdings  vs.  Anglesey Mining

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 9 (%) 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.

Anglesey Mining

Risk-Adjusted Performance

Very Weak

Over the last 90 days Anglesey Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Anglesey Mining is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Wizz Air and Anglesey Mining

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

The idea behind Wizz Air Holdings and Anglesey Mining 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.