Correlation Between Finnair Oyj and Prudential Financial
Can any of the company-specific risk be diversified away by investing in both Finnair Oyj and Prudential Financial 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 Prudential Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Finnair Oyj and Prudential Financial, you can compare the effects of market volatilities on Finnair Oyj and Prudential Financial 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 Prudential Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Finnair Oyj and Prudential Financial.
Diversification Opportunities for Finnair Oyj and Prudential Financial
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Finnair and Prudential is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Finnair Oyj and Prudential Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Financial 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 Prudential Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Financial has no effect on the direction of Finnair Oyj i.e., Finnair Oyj and Prudential Financial go up and down completely randomly.
Pair Corralation between Finnair Oyj and Prudential Financial
Assuming the 90 days trading horizon Finnair Oyj is expected to generate 1.11 times more return on investment than Prudential Financial. However, Finnair Oyj is 1.11 times more volatile than Prudential Financial. It trades about 0.28 of its potential returns per unit of risk. Prudential Financial is currently generating about 0.12 per unit of risk. If you would invest 228.00 in Finnair Oyj on November 2, 2024 and sell it today you would earn a total of 23.00 from holding Finnair Oyj or generate 10.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Finnair Oyj vs. Prudential Financial
Performance |
| Timeline |
| Finnair Oyj |
| Prudential Financial |
Finnair Oyj and Prudential Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Finnair Oyj and Prudential Financial
The main advantage of trading using opposite Finnair Oyj and Prudential Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Finnair Oyj position performs unexpectedly, Prudential Financial 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 Prudential Financial will offset losses from the drop in Prudential Financial's long position.| Finnair Oyj vs. Amedeo Air Four | Finnair Oyj vs. Empire Metals Limited | Finnair Oyj vs. Wizz Air Holdings | Finnair Oyj vs. Ryanair Holdings plc |
| Prudential Financial vs. Bankers Investment Trust | Prudential Financial vs. Kinnevik Investment AB | Prudential Financial vs. Rheinmetall AG | Prudential Financial vs. Scottish American Investment |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
Other Complementary Tools
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Stocks Directory Find actively traded stocks across global markets | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio |