Correlation Between Finnair Oyj and Norwegian Air
Can any of the company-specific risk be diversified away by investing in both Finnair Oyj and Norwegian Air 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 Finnair Oyj and Norwegian Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Finnair Oyj and Norwegian Air Shuttle, you can compare the effects of market volatilities on Finnair Oyj and Norwegian Air 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 Finnair Oyj with a short position of Norwegian Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Finnair Oyj and Norwegian Air.
Diversification Opportunities for Finnair Oyj and Norwegian Air
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Finnair and Norwegian is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Finnair Oyj and Norwegian Air Shuttle in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Norwegian Air Shuttle and Finnair Oyj 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 Finnair Oyj are associated (or correlated) with Norwegian Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Norwegian Air Shuttle has no effect on the direction of Finnair Oyj i.e., Finnair Oyj and Norwegian Air go up and down completely randomly.
Pair Corralation between Finnair Oyj and Norwegian Air
Assuming the 90 days trading horizon Finnair Oyj is expected to generate 1.03 times more return on investment than Norwegian Air. However, Finnair Oyj is 1.03 times more volatile than Norwegian Air Shuttle. It trades about 0.15 of its potential returns per unit of risk. Norwegian Air Shuttle is currently generating about 0.1 per unit of risk. If you would invest 222.00 in Finnair Oyj on September 13, 2024 and sell it today you would earn a total of 15.00 from holding Finnair Oyj or generate 6.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Finnair Oyj vs. Norwegian Air Shuttle
Performance |
| Timeline |
| Finnair Oyj |
| Norwegian Air Shuttle |
Finnair Oyj and Norwegian Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Finnair Oyj and Norwegian Air
The main advantage of trading using opposite Finnair Oyj and Norwegian Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Finnair Oyj position performs unexpectedly, Norwegian Air 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 Norwegian Air will offset losses from the drop in Norwegian Air's long position.| Finnair Oyj vs. Samsung Electronics Co | Finnair Oyj vs. Samsung Electronics Co | Finnair Oyj vs. Hyundai Motor | Finnair Oyj vs. Reliance Industries Ltd |
| Norwegian Air vs. Samsung Electronics Co | Norwegian Air vs. Samsung Electronics Co | Norwegian Air vs. Hyundai Motor | Norwegian Air vs. Reliance Industries Ltd |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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