Correlation Between Employers Holdings and Finnair Oyj
Can any of the company-specific risk be diversified away by investing in both Employers Holdings 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 Employers Holdings and Finnair Oyj into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Employers Holdings and Finnair Oyj, you can compare the effects of market volatilities on Employers Holdings 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 Employers Holdings with a short position of Finnair Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Employers Holdings and Finnair Oyj.
Diversification Opportunities for Employers Holdings and Finnair Oyj
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Employers and Finnair is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Employers Holdings and Finnair Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Finnair Oyj and Employers Holdings 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 Employers Holdings 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 Employers Holdings i.e., Employers Holdings and Finnair Oyj go up and down completely randomly.
Pair Corralation between Employers Holdings and Finnair Oyj
Considering the 90-day investment horizon Employers Holdings is expected to generate 0.85 times more return on investment than Finnair Oyj. However, Employers Holdings is 1.18 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 -0.05 per unit of risk. If you would invest 4,833 in Employers Holdings on September 3, 2024 and sell it today you would earn a total of 503.00 from holding Employers Holdings or generate 10.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 98.46% |
| Values | Daily Returns |
Employers Holdings vs. Finnair Oyj
Performance |
| Timeline |
| Employers Holdings |
| Finnair Oyj |
Employers Holdings and Finnair Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Employers Holdings and Finnair Oyj
The main advantage of trading using opposite Employers Holdings and Finnair Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Employers Holdings 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.| Employers Holdings vs. ICC Holdings | Employers Holdings vs. AMERISAFE | Employers Holdings vs. NMI Holdings | Employers Holdings vs. Investors Title |
| 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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