Correlation Between New Residential and Finnair Oyj
Can any of the company-specific risk be diversified away by investing in both New Residential 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 New Residential and Finnair Oyj into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Residential Investment and Finnair Oyj, you can compare the effects of market volatilities on New Residential 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 New Residential with a short position of Finnair Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Residential and Finnair Oyj.
Diversification Opportunities for New Residential and Finnair Oyj
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between New and Finnair is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding New Residential Investment and Finnair Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Finnair Oyj and New Residential 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 New Residential Investment 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 New Residential i.e., New Residential and Finnair Oyj go up and down completely randomly.
Pair Corralation between New Residential and Finnair Oyj
Assuming the 90 days trading horizon New Residential Investment is expected to generate 0.34 times more return on investment than Finnair Oyj. However, New Residential Investment is 2.93 times less risky than Finnair Oyj. It trades about 0.1 of its potential returns per unit of risk. Finnair Oyj is currently generating about -0.03 per unit of risk. If you would invest 665.00 in New Residential Investment on November 30, 2024 and sell it today you would earn a total of 539.00 from holding New Residential Investment or generate 81.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 98.19% |
| Values | Daily Returns |
New Residential Investment vs. Finnair Oyj
Performance |
| Timeline |
| New Residential Inve |
| Finnair Oyj |
New Residential and Finnair Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Residential and Finnair Oyj
The main advantage of trading using opposite New Residential and Finnair Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Residential 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.| New Residential vs. GreenX Metals | New Residential vs. Direct Line Insurance | New Residential vs. Cembra Money Bank | New Residential vs. Sparebank 1 SR |
| Finnair Oyj vs. Associated British Foods | Finnair Oyj vs. Global Net Lease | Finnair Oyj vs. National Beverage Corp | Finnair Oyj vs. Nordea Bank Abp |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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