Correlation Between Finnair Oyj and Pentair PLC
Can any of the company-specific risk be diversified away by investing in both Finnair Oyj and Pentair PLC 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 Pentair PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Finnair Oyj and Pentair PLC, you can compare the effects of market volatilities on Finnair Oyj and Pentair PLC 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 Pentair PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Finnair Oyj and Pentair PLC.
Diversification Opportunities for Finnair Oyj and Pentair PLC
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Finnair and Pentair is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Finnair Oyj and Pentair PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pentair PLC 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 Pentair PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pentair PLC has no effect on the direction of Finnair Oyj i.e., Finnair Oyj and Pentair PLC go up and down completely randomly.
Pair Corralation between Finnair Oyj and Pentair PLC
Assuming the 90 days trading horizon Finnair Oyj is expected to generate 1.48 times more return on investment than Pentair PLC. However, Finnair Oyj is 1.48 times more volatile than Pentair PLC. It trades about 0.27 of its potential returns per unit of risk. Pentair PLC is currently generating about 0.15 per unit of risk. If you would invest 228.00 in Finnair Oyj on November 3, 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 | Insignificant |
| Accuracy | 91.3% |
| Values | Daily Returns |
Finnair Oyj vs. Pentair PLC
Performance |
| Timeline |
| Finnair Oyj |
| Pentair PLC |
Finnair Oyj and Pentair PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Finnair Oyj and Pentair PLC
The main advantage of trading using opposite Finnair Oyj and Pentair PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Finnair Oyj position performs unexpectedly, Pentair PLC 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 Pentair PLC will offset losses from the drop in Pentair PLC's long position.| Finnair Oyj vs. JD Sports Fashion | Finnair Oyj vs. XLMedia PLC | Finnair Oyj vs. Ameriprise Financial | Finnair Oyj vs. Hollywood Bowl Group |
| Pentair PLC vs. Zurich Insurance Group | Pentair PLC vs. Ecofin Global Utilities | Pentair PLC vs. Delta Air Lines | Pentair PLC vs. SBM Offshore NV |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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