Correlation Between Wizz Air and Cedar Fair

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

Diversification Opportunities for Wizz Air and Cedar Fair

0.54

Correlation Coefficient

Wizz Air  Cedar Fair

Very weak diversification

The 3 months correlation between Wizz and Cedar is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Wizz Air Holdings and Cedar Fair LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cedar Fair LP 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 Cedar Fair. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cedar Fair LP has no effect on the direction of Wizz Air i.e., Wizz Air and Cedar Fair go up and down completely randomly.

Pair Corralation between Wizz Air and Cedar Fair

Assuming the 90 days horizon Wizz Air is expected to generate 10.93 times less return on investment than Cedar Fair. In addition to that, Wizz Air is 1.52 times more volatile than Cedar Fair LP. It trades about 0.0 of its total potential returns per unit of risk. Cedar Fair LP is currently generating about 0.05 per unit of volatility. If you would invest  4,212  in Cedar Fair LP on March 1, 2024 and sell it today you would earn a total of  169.00  from holding Cedar Fair LP or generate 4.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Wizz Air Holdings  vs.  Cedar Fair LP

Wizz Air Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wizz Air Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Wizz Air is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Cedar Fair LP

Risk-Adjusted Performance

3 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cedar Fair LP are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Cedar Fair is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Wizz Air and Cedar Fair

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

The idea behind Wizz Air Holdings and Cedar Fair LP 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.