Correlation Between Finnair Oyj and Dunedin Enterprise
Can any of the company-specific risk be diversified away by investing in both Finnair Oyj and Dunedin Enterprise 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 Dunedin Enterprise into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Finnair Oyj and Dunedin Enterprise Investment, you can compare the effects of market volatilities on Finnair Oyj and Dunedin Enterprise 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 Dunedin Enterprise. Check out your portfolio center. Please also check ongoing floating volatility patterns of Finnair Oyj and Dunedin Enterprise.
Diversification Opportunities for Finnair Oyj and Dunedin Enterprise
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Finnair and Dunedin is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Finnair Oyj and Dunedin Enterprise Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dunedin Enterprise 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 Dunedin Enterprise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dunedin Enterprise has no effect on the direction of Finnair Oyj i.e., Finnair Oyj and Dunedin Enterprise go up and down completely randomly.
Pair Corralation between Finnair Oyj and Dunedin Enterprise
Assuming the 90 days trading horizon Finnair Oyj is expected to generate 2.31 times more return on investment than Dunedin Enterprise. However, Finnair Oyj is 2.31 times more volatile than Dunedin Enterprise Investment. It trades about 0.16 of its potential returns per unit of risk. Dunedin Enterprise Investment is currently generating about 0.37 per unit of risk. If you would invest 221.00 in Finnair Oyj on October 25, 2024 and sell it today you would earn a total of 11.00 from holding Finnair Oyj or generate 4.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.74% |
| Values | Daily Returns |
Finnair Oyj vs. Dunedin Enterprise Investment
Performance |
| Timeline |
| Finnair Oyj |
| Dunedin Enterprise |
Finnair Oyj and Dunedin Enterprise Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Finnair Oyj and Dunedin Enterprise
The main advantage of trading using opposite Finnair Oyj and Dunedin Enterprise positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Finnair Oyj position performs unexpectedly, Dunedin Enterprise 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 Dunedin Enterprise will offset losses from the drop in Dunedin Enterprise's long position.| Finnair Oyj vs. Xeros Technology Group | Finnair Oyj vs. Darden Restaurants | Finnair Oyj vs. DXC Technology Co | Finnair Oyj vs. Playtech Plc |
| Dunedin Enterprise vs. Naked Wines plc | Dunedin Enterprise vs. Finnair Oyj | Dunedin Enterprise vs. Delta Air Lines | Dunedin Enterprise vs. St Galler Kantonalbank |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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