Correlation Between Sparebank and Finnair Oyj
Can any of the company-specific risk be diversified away by investing in both Sparebank 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 Sparebank and Finnair Oyj into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sparebank 1 SR and Finnair Oyj, you can compare the effects of market volatilities on Sparebank 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 Sparebank with a short position of Finnair Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sparebank and Finnair Oyj.
Diversification Opportunities for Sparebank and Finnair Oyj
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sparebank and Finnair is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Sparebank 1 SR and Finnair Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Finnair Oyj and Sparebank 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 Sparebank 1 SR 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 Sparebank i.e., Sparebank and Finnair Oyj go up and down completely randomly.
Pair Corralation between Sparebank and Finnair Oyj
Assuming the 90 days trading horizon Sparebank 1 SR is expected to generate 0.34 times more return on investment than Finnair Oyj. However, Sparebank 1 SR is 2.94 times less risky than Finnair Oyj. It trades about 0.09 of its potential returns per unit of risk. Finnair Oyj is currently generating about -0.09 per unit of risk. If you would invest 11,431 in Sparebank 1 SR on September 1, 2024 and sell it today you would earn a total of 3,049 from holding Sparebank 1 SR or generate 26.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sparebank 1 SR vs. Finnair Oyj
Performance |
| Timeline |
| Sparebank 1 SR |
| Finnair Oyj |
Sparebank and Finnair Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sparebank and Finnair Oyj
The main advantage of trading using opposite Sparebank and Finnair Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sparebank 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.| Sparebank vs. Hollywood Bowl Group | Sparebank vs. XLMedia PLC | Sparebank vs. Catalyst Media Group | Sparebank vs. Atresmedia |
| Finnair Oyj vs. Uniper SE | Finnair Oyj vs. Mulberry Group PLC | Finnair Oyj vs. London Security Plc | Finnair Oyj vs. Triad Group 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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