Correlation Between Etsy and Finnair Oyj
Can any of the company-specific risk be diversified away by investing in both Etsy and Finnair Oyj 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 Etsy and Finnair Oyj into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Etsy Inc and Finnair Oyj, you can compare the effects of market volatilities on Etsy and Finnair Oyj 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 Etsy with a short position of Finnair Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Etsy and Finnair Oyj.
Diversification Opportunities for Etsy and Finnair Oyj
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Etsy and Finnair is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Etsy Inc and Finnair Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Finnair Oyj and Etsy 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 Etsy Inc are associated (or correlated) with Finnair Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Finnair Oyj has no effect on the direction of Etsy i.e., Etsy and Finnair Oyj go up and down completely randomly.
Pair Corralation between Etsy and Finnair Oyj
Assuming the 90 days trading horizon Etsy Inc is expected to generate 0.68 times more return on investment than Finnair Oyj. However, Etsy Inc is 1.47 times less risky than Finnair Oyj. It trades about -0.03 of its potential returns per unit of risk. Finnair Oyj is currently generating about -0.08 per unit of risk. If you would invest 8,748 in Etsy Inc on August 31, 2024 and sell it today you would lose (3,225) from holding Etsy Inc or give up 36.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.69% |
| Values | Daily Returns |
Etsy Inc vs. Finnair Oyj
Performance |
| Timeline |
| Etsy Inc |
| Finnair Oyj |
Etsy and Finnair Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Etsy and Finnair Oyj
The main advantage of trading using opposite Etsy and Finnair Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Etsy position performs unexpectedly, Finnair Oyj 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 Finnair Oyj will offset losses from the drop in Finnair Oyj's long position.| Etsy vs. Norwegian Air Shuttle | Etsy vs. Pentair PLC | Etsy vs. Air Products Chemicals | Etsy vs. Alaska Air Group |
| Finnair Oyj vs. Zegona Communications Plc | Finnair Oyj vs. Universal Display Corp | Finnair Oyj vs. Alaska Air Group | Finnair Oyj vs. Porvair 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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