Correlation Between Royal Bank and Finnair Oyj
Can any of the company-specific risk be diversified away by investing in both Royal Bank 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 Royal Bank and Finnair Oyj into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Royal Bank of and Finnair Oyj, you can compare the effects of market volatilities on Royal Bank 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 Royal Bank with a short position of Finnair Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Royal Bank and Finnair Oyj.
Diversification Opportunities for Royal Bank and Finnair Oyj
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Royal and Finnair is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Royal Bank of and Finnair Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Finnair Oyj and Royal Bank 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 Royal Bank of 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 Royal Bank i.e., Royal Bank and Finnair Oyj go up and down completely randomly.
Pair Corralation between Royal Bank and Finnair Oyj
Assuming the 90 days trading horizon Royal Bank of is expected to generate 0.28 times more return on investment than Finnair Oyj. However, Royal Bank of is 3.6 times less risky than Finnair Oyj. It trades about 0.06 of its potential returns per unit of risk. Finnair Oyj is currently generating about -0.03 per unit of risk. If you would invest 9,071 in Royal Bank of on November 27, 2024 and sell it today you would earn a total of 2,867 from holding Royal Bank of or generate 31.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.47% |
| Values | Daily Returns |
Royal Bank of vs. Finnair Oyj
Performance |
| Timeline |
| Royal Bank |
| Finnair Oyj |
Royal Bank and Finnair Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Royal Bank and Finnair Oyj
The main advantage of trading using opposite Royal Bank and Finnair Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Royal Bank 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.| Royal Bank vs. Electronic Arts | Royal Bank vs. Dairy Farm International | Royal Bank vs. Charter Communications Cl | Royal Bank vs. Hollywood Bowl Group |
| Finnair Oyj vs. Learning Technologies Group | Finnair Oyj vs. Nordea Bank Abp | Finnair Oyj vs. Tetragon Financial Group | Finnair Oyj vs. Westlake Chemical 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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