Correlation Between Finnair Oyj and BW Offshore
Can any of the company-specific risk be diversified away by investing in both Finnair Oyj and BW Offshore 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 BW Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Finnair Oyj and BW Offshore Limited, you can compare the effects of market volatilities on Finnair Oyj and BW Offshore 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 BW Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Finnair Oyj and BW Offshore.
Diversification Opportunities for Finnair Oyj and BW Offshore
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Finnair and BWOFY is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Finnair Oyj and BW Offshore Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BW Offshore Limited 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 BW Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BW Offshore Limited has no effect on the direction of Finnair Oyj i.e., Finnair Oyj and BW Offshore go up and down completely randomly.
Pair Corralation between Finnair Oyj and BW Offshore
Assuming the 90 days horizon Finnair Oyj is expected to generate 15.28 times more return on investment than BW Offshore. However, Finnair Oyj is 15.28 times more volatile than BW Offshore Limited. It trades about 0.05 of its potential returns per unit of risk. BW Offshore Limited is currently generating about 0.04 per unit of risk. If you would invest 200.00 in Finnair Oyj on November 3, 2024 and sell it today you would earn a total of 50.00 from holding Finnair Oyj or generate 25.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.41% |
| Values | Daily Returns |
Finnair Oyj vs. BW Offshore Limited
Performance |
| Timeline |
| Finnair Oyj |
| BW Offshore Limited |
Finnair Oyj and BW Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Finnair Oyj and BW Offshore
The main advantage of trading using opposite Finnair Oyj and BW Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Finnair Oyj position performs unexpectedly, BW Offshore 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 BW Offshore will offset losses from the drop in BW Offshore's long position.| Finnair Oyj vs. easyJet plc | Finnair Oyj vs. Norse Atlantic ASA | Finnair Oyj vs. Air New Zealand | Finnair Oyj vs. Air China Limited |
| BW Offshore vs. Allient | BW Offshore vs. Analog Devices | BW Offshore vs. Alvotech | BW Offshore vs. Western Digital |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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