Correlation Between Finnair Oyj and SBM Offshore
Can any of the company-specific risk be diversified away by investing in both Finnair Oyj and SBM Offshore 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 SBM Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Finnair Oyj and SBM Offshore NV, you can compare the effects of market volatilities on Finnair Oyj and SBM Offshore 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 SBM Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Finnair Oyj and SBM Offshore.
Diversification Opportunities for Finnair Oyj and SBM Offshore
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Finnair and SBM is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Finnair Oyj and SBM Offshore NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SBM Offshore NV 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 SBM Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SBM Offshore NV has no effect on the direction of Finnair Oyj i.e., Finnair Oyj and SBM Offshore go up and down completely randomly.
Pair Corralation between Finnair Oyj and SBM Offshore
Assuming the 90 days trading horizon Finnair Oyj is expected to under-perform the SBM Offshore. In addition to that, Finnair Oyj is 2.15 times more volatile than SBM Offshore NV. It trades about -0.05 of its total potential returns per unit of risk. SBM Offshore NV is currently generating about 0.05 per unit of volatility. If you would invest 1,259 in SBM Offshore NV on October 19, 2024 and sell it today you would earn a total of 545.00 from holding SBM Offshore NV or generate 43.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Finnair Oyj vs. SBM Offshore NV
Performance |
| Timeline |
| Finnair Oyj |
| SBM Offshore NV |
Finnair Oyj and SBM Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Finnair Oyj and SBM Offshore
The main advantage of trading using opposite Finnair Oyj and SBM Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Finnair Oyj position performs unexpectedly, SBM Offshore 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 SBM Offshore will offset losses from the drop in SBM Offshore's long position.| Finnair Oyj vs. Molson Coors Beverage | Finnair Oyj vs. Lundin Mining Corp | Finnair Oyj vs. United Utilities Group | Finnair Oyj vs. AMG Advanced Metallurgical |
| SBM Offshore vs. XLMedia PLC | SBM Offshore vs. Aeorema Communications Plc | SBM Offshore vs. Flutter Entertainment PLC | SBM Offshore vs. Zinc Media Group |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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