Correlation Between Finnair Oyj and Nok Airlines
Can any of the company-specific risk be diversified away by investing in both Finnair Oyj and Nok Airlines 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 Nok Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Finnair Oyj and Nok Airlines Public, you can compare the effects of market volatilities on Finnair Oyj and Nok Airlines 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 Nok Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Finnair Oyj and Nok Airlines.
Diversification Opportunities for Finnair Oyj and Nok Airlines
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Finnair and Nok is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Finnair Oyj and Nok Airlines Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nok Airlines Public 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 Nok Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nok Airlines Public has no effect on the direction of Finnair Oyj i.e., Finnair Oyj and Nok Airlines go up and down completely randomly.
Pair Corralation between Finnair Oyj and Nok Airlines
Assuming the 90 days horizon Finnair Oyj is expected to generate 81.24 times less return on investment than Nok Airlines. But when comparing it to its historical volatility, Finnair Oyj is 9.53 times less risky than Nok Airlines. It trades about 0.03 of its potential returns per unit of risk. Nok Airlines Public is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 0.08 in Nok Airlines Public on September 19, 2024 and sell it today you would earn a total of 0.52 from holding Nok Airlines Public or generate 650.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Finnair Oyj vs. Nok Airlines Public
Performance |
| Timeline |
| Finnair Oyj |
| Nok Airlines Public |
Finnair Oyj and Nok Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Finnair Oyj and Nok Airlines
The main advantage of trading using opposite Finnair Oyj and Nok Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Finnair Oyj position performs unexpectedly, Nok Airlines 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 Nok Airlines will offset losses from the drop in Nok Airlines' 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 |
| Nok Airlines vs. Norse Atlantic ASA | Nok Airlines vs. Cebu Air | Nok Airlines vs. Finnair Oyj | Nok Airlines vs. easyJet plc |
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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