Correlation Between Finnair Oyj and Toyota
Can any of the company-specific risk be diversified away by investing in both Finnair Oyj and Toyota 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 Toyota into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Finnair Oyj and Toyota Motor Corp, you can compare the effects of market volatilities on Finnair Oyj and Toyota 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 Toyota. Check out your portfolio center. Please also check ongoing floating volatility patterns of Finnair Oyj and Toyota.
Diversification Opportunities for Finnair Oyj and Toyota
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Finnair and Toyota is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Finnair Oyj and Toyota Motor Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Toyota Motor Corp 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 Toyota. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Toyota Motor Corp has no effect on the direction of Finnair Oyj i.e., Finnair Oyj and Toyota go up and down completely randomly.
Pair Corralation between Finnair Oyj and Toyota
Assuming the 90 days trading horizon Finnair Oyj is expected to under-perform the Toyota. In addition to that, Finnair Oyj is 1.91 times more volatile than Toyota Motor Corp. It trades about -0.36 of its total potential returns per unit of risk. Toyota Motor Corp is currently generating about 0.12 per unit of volatility. If you would invest 260,250 in Toyota Motor Corp on August 28, 2024 and sell it today you would earn a total of 6,200 from holding Toyota Motor Corp or generate 2.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Finnair Oyj vs. Toyota Motor Corp
Performance |
| Timeline |
| Finnair Oyj |
| Toyota Motor Corp |
Finnair Oyj and Toyota Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Finnair Oyj and Toyota
The main advantage of trading using opposite Finnair Oyj and Toyota positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Finnair Oyj position performs unexpectedly, Toyota 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 Toyota will offset losses from the drop in Toyota's long position.| Finnair Oyj vs. Samsung Electronics Co | Finnair Oyj vs. Samsung Electronics Co | Finnair Oyj vs. Hyundai Motor | Finnair Oyj vs. Toyota Motor Corp |
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 CEOs Directory module to screen CEOs from public companies around the world.
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