Correlation Between Finnair Oyj and Arrow Electronics
Can any of the company-specific risk be diversified away by investing in both Finnair Oyj and Arrow Electronics 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 Finnair Oyj and Arrow Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Finnair Oyj and Arrow Electronics, you can compare the effects of market volatilities on Finnair Oyj and Arrow Electronics 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 Finnair Oyj with a short position of Arrow Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Finnair Oyj and Arrow Electronics.
Diversification Opportunities for Finnair Oyj and Arrow Electronics
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Finnair and Arrow is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Finnair Oyj and Arrow Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arrow Electronics and Finnair Oyj 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 Finnair Oyj are associated (or correlated) with Arrow Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arrow Electronics has no effect on the direction of Finnair Oyj i.e., Finnair Oyj and Arrow Electronics go up and down completely randomly.
Pair Corralation between Finnair Oyj and Arrow Electronics
Assuming the 90 days horizon Finnair Oyj is expected to generate 13.53 times more return on investment than Arrow Electronics. However, Finnair Oyj is 13.53 times more volatile than Arrow Electronics. It trades about 0.03 of its potential returns per unit of risk. Arrow Electronics is currently generating about -0.01 per unit of risk. If you would invest 783.00 in Finnair Oyj on August 31, 2024 and sell it today you would lose (550.00) from holding Finnair Oyj or give up 70.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.73% |
| Values | Daily Returns |
Finnair Oyj vs. Arrow Electronics
Performance |
| Timeline |
| Finnair Oyj |
| Arrow Electronics |
Finnair Oyj and Arrow Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Finnair Oyj and Arrow Electronics
The main advantage of trading using opposite Finnair Oyj and Arrow Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Finnair Oyj position performs unexpectedly, Arrow Electronics 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 Arrow Electronics will offset losses from the drop in Arrow Electronics' long position.| Finnair Oyj vs. Copa Holdings SA | Finnair Oyj vs. United Airlines Holdings | Finnair Oyj vs. Delta Air Lines | Finnair Oyj vs. SkyWest |
| Arrow Electronics vs. Insight Enterprises | Arrow Electronics vs. Synnex | Arrow Electronics vs. Climb Global Solutions | Arrow Electronics vs. ScanSource |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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