Correlation Between Finnair Oyj and Ecofin Global
Can any of the company-specific risk be diversified away by investing in both Finnair Oyj and Ecofin Global 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 Ecofin Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Finnair Oyj and Ecofin Global Utilities, you can compare the effects of market volatilities on Finnair Oyj and Ecofin Global 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 Ecofin Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Finnair Oyj and Ecofin Global.
Diversification Opportunities for Finnair Oyj and Ecofin Global
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Finnair and Ecofin is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Finnair Oyj and Ecofin Global Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecofin Global Utilities 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 Ecofin Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecofin Global Utilities has no effect on the direction of Finnair Oyj i.e., Finnair Oyj and Ecofin Global go up and down completely randomly.
Pair Corralation between Finnair Oyj and Ecofin Global
Assuming the 90 days trading horizon Finnair Oyj is expected to generate 1.06 times more return on investment than Ecofin Global. However, Finnair Oyj is 1.06 times more volatile than Ecofin Global Utilities. It trades about 0.34 of its potential returns per unit of risk. Ecofin Global Utilities is currently generating about 0.25 per unit of risk. If you would invest 222.00 in Finnair Oyj on November 1, 2024 and sell it today you would earn a total of 28.00 from holding Finnair Oyj or generate 12.61% 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. Ecofin Global Utilities
Performance |
| Timeline |
| Finnair Oyj |
| Ecofin Global Utilities |
Finnair Oyj and Ecofin Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Finnair Oyj and Ecofin Global
The main advantage of trading using opposite Finnair Oyj and Ecofin Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Finnair Oyj position performs unexpectedly, Ecofin Global 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 Ecofin Global will offset losses from the drop in Ecofin Global's long position.| Finnair Oyj vs. Axway Software SA | Finnair Oyj vs. CleanTech Lithium plc | Finnair Oyj vs. Auction Technology Group | Finnair Oyj vs. Scandinavian Tobacco Group |
| Ecofin Global vs. SupplyMe Capital PLC | Ecofin Global vs. Premier African Minerals | Ecofin Global vs. SANTANDER UK 8 | Ecofin Global vs. Tower Resources plc |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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