Correlation Between Finnair Oyj and ESH Acquisition
Can any of the company-specific risk be diversified away by investing in both Finnair Oyj and ESH Acquisition 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 ESH Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Finnair Oyj and ESH Acquisition Corp, you can compare the effects of market volatilities on Finnair Oyj and ESH Acquisition 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 ESH Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Finnair Oyj and ESH Acquisition.
Diversification Opportunities for Finnair Oyj and ESH Acquisition
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Finnair and ESH is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Finnair Oyj and ESH Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ESH Acquisition Corp 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 ESH Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ESH Acquisition Corp has no effect on the direction of Finnair Oyj i.e., Finnair Oyj and ESH Acquisition go up and down completely randomly.
Pair Corralation between Finnair Oyj and ESH Acquisition
Assuming the 90 days horizon Finnair Oyj is expected to generate 0.65 times more return on investment than ESH Acquisition. However, Finnair Oyj is 1.53 times less risky than ESH Acquisition. It trades about -0.22 of its potential returns per unit of risk. ESH Acquisition Corp is currently generating about -0.26 per unit of risk. If you would invest 250.00 in Finnair Oyj on October 25, 2024 and sell it today you would lose (15.00) from holding Finnair Oyj or give up 6.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 85.71% |
| Values | Daily Returns |
Finnair Oyj vs. ESH Acquisition Corp
Performance |
| Timeline |
| Finnair Oyj |
| ESH Acquisition Corp |
Finnair Oyj and ESH Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Finnair Oyj and ESH Acquisition
The main advantage of trading using opposite Finnair Oyj and ESH Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Finnair Oyj position performs unexpectedly, ESH Acquisition 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 ESH Acquisition will offset losses from the drop in ESH Acquisition'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 |
| ESH Acquisition vs. Sphere Entertainment Co | ESH Acquisition vs. Robix Environmental Technologies | ESH Acquisition vs. Zhihu Inc ADR | ESH Acquisition vs. KVH Industries |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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