Correlation Between Finnair Oyj and VeriSign
Can any of the company-specific risk be diversified away by investing in both Finnair Oyj and VeriSign 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 VeriSign into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Finnair Oyj and VeriSign, you can compare the effects of market volatilities on Finnair Oyj and VeriSign 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 VeriSign. Check out your portfolio center. Please also check ongoing floating volatility patterns of Finnair Oyj and VeriSign.
Diversification Opportunities for Finnair Oyj and VeriSign
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Finnair and VeriSign is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Finnair Oyj and VeriSign in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VeriSign 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 VeriSign. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VeriSign has no effect on the direction of Finnair Oyj i.e., Finnair Oyj and VeriSign go up and down completely randomly.
Pair Corralation between Finnair Oyj and VeriSign
Assuming the 90 days trading horizon Finnair Oyj is expected to generate 1.18 times less return on investment than VeriSign. In addition to that, Finnair Oyj is 1.13 times more volatile than VeriSign. It trades about 0.16 of its total potential returns per unit of risk. VeriSign is currently generating about 0.21 per unit of volatility. If you would invest 18,423 in VeriSign on September 14, 2024 and sell it today you would earn a total of 1,539 from holding VeriSign or generate 8.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Finnair Oyj vs. VeriSign
Performance |
| Timeline |
| Finnair Oyj |
| VeriSign |
Finnair Oyj and VeriSign Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Finnair Oyj and VeriSign
The main advantage of trading using opposite Finnair Oyj and VeriSign positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Finnair Oyj position performs unexpectedly, VeriSign 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 VeriSign will offset losses from the drop in VeriSign's long position.| Finnair Oyj vs. Eastman Chemical Co | Finnair Oyj vs. Gruppo MutuiOnline SpA | Finnair Oyj vs. Westlake Chemical Corp | Finnair Oyj vs. Gamma Communications PLC |
| VeriSign vs. Prosiebensat 1 Media | VeriSign vs. Finnair Oyj | VeriSign vs. G5 Entertainment AB | VeriSign vs. Atresmedia |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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