Correlation Between Finnair Oyj and Golden Metal
Can any of the company-specific risk be diversified away by investing in both Finnair Oyj and Golden Metal 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 Golden Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Finnair Oyj and Golden Metal Resources, you can compare the effects of market volatilities on Finnair Oyj and Golden Metal 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 Golden Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Finnair Oyj and Golden Metal.
Diversification Opportunities for Finnair Oyj and Golden Metal
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Finnair and Golden is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Finnair Oyj and Golden Metal Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Metal Resources 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 Golden Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Metal Resources has no effect on the direction of Finnair Oyj i.e., Finnair Oyj and Golden Metal go up and down completely randomly.
Pair Corralation between Finnair Oyj and Golden Metal
Assuming the 90 days trading horizon Finnair Oyj is expected to generate 0.56 times more return on investment than Golden Metal. However, Finnair Oyj is 1.79 times less risky than Golden Metal. It trades about 0.22 of its potential returns per unit of risk. Golden Metal Resources is currently generating about 0.06 per unit of risk. If you would invest 234.00 in Finnair Oyj on November 5, 2024 and sell it today you would earn a total of 17.00 from holding Finnair Oyj or generate 7.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Finnair Oyj vs. Golden Metal Resources
Performance |
| Timeline |
| Finnair Oyj |
| Golden Metal Resources |
Finnair Oyj and Golden Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Finnair Oyj and Golden Metal
The main advantage of trading using opposite Finnair Oyj and Golden Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Finnair Oyj position performs unexpectedly, Golden Metal 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 Golden Metal will offset losses from the drop in Golden Metal's long position.| Finnair Oyj vs. Coeur Mining | Finnair Oyj vs. Litigation Capital Management | Finnair Oyj vs. Geely Automobile Holdings | Finnair Oyj vs. Liontrust Asset Management |
| Golden Metal vs. Taiwan Semiconductor Manufacturing | Golden Metal vs. Lindsell Train Investment | Golden Metal vs. United Airlines Holdings | Golden Metal vs. Tatton Asset Management |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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