Correlation Between Generative and Finnair Oyj
Can any of the company-specific risk be diversified away by investing in both Generative 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 Generative and Finnair Oyj into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Generative AI Solutions and Finnair Oyj, you can compare the effects of market volatilities on Generative 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 Generative with a short position of Finnair Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Generative and Finnair Oyj.
Diversification Opportunities for Generative and Finnair Oyj
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Generative and Finnair is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Generative AI Solutions and Finnair Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Finnair Oyj and Generative 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 Generative AI Solutions 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 Generative i.e., Generative and Finnair Oyj go up and down completely randomly.
Pair Corralation between Generative and Finnair Oyj
Assuming the 90 days horizon Generative AI Solutions is expected to generate 19.21 times more return on investment than Finnair Oyj. However, Generative is 19.21 times more volatile than Finnair Oyj. It trades about 0.08 of its potential returns per unit of risk. Finnair Oyj is currently generating about -0.08 per unit of risk. If you would invest 8.00 in Generative AI Solutions on September 14, 2024 and sell it today you would lose (0.20) from holding Generative AI Solutions or give up 2.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Generative AI Solutions vs. Finnair Oyj
Performance |
| Timeline |
| Generative AI Solutions |
| Finnair Oyj |
Generative and Finnair Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Generative and Finnair Oyj
The main advantage of trading using opposite Generative and Finnair Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Generative 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.| Generative vs. Ironveld Plc | Generative vs. Summit Environmental | Generative vs. Tianjin Capital Environmental | Generative vs. Red Branch Technologies |
| Finnair Oyj vs. easyJet plc | Finnair Oyj vs. Norse Atlantic ASA | Finnair Oyj vs. Air New Zealand | Finnair Oyj vs. Air China Limited |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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