Correlation Between Finnair Oyj and ServiceNow
Can any of the company-specific risk be diversified away by investing in both Finnair Oyj and ServiceNow 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 ServiceNow into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Finnair Oyj and ServiceNow, you can compare the effects of market volatilities on Finnair Oyj and ServiceNow 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 ServiceNow. Check out your portfolio center. Please also check ongoing floating volatility patterns of Finnair Oyj and ServiceNow.
Diversification Opportunities for Finnair Oyj and ServiceNow
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Finnair and ServiceNow is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Finnair Oyj and ServiceNow in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ServiceNow 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 ServiceNow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ServiceNow has no effect on the direction of Finnair Oyj i.e., Finnair Oyj and ServiceNow go up and down completely randomly.
Pair Corralation between Finnair Oyj and ServiceNow
Assuming the 90 days horizon Finnair Oyj is expected to generate 12.52 times more return on investment than ServiceNow. However, Finnair Oyj is 12.52 times more volatile than ServiceNow. It trades about 0.04 of its potential returns per unit of risk. ServiceNow is currently generating about 0.09 per unit of risk. If you would invest 600.00 in Finnair Oyj on September 4, 2024 and sell it today you would lose (375.00) from holding Finnair Oyj or give up 62.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Finnair Oyj vs. ServiceNow
Performance |
| Timeline |
| Finnair Oyj |
| ServiceNow |
Finnair Oyj and ServiceNow Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Finnair Oyj and ServiceNow
The main advantage of trading using opposite Finnair Oyj and ServiceNow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Finnair Oyj position performs unexpectedly, ServiceNow 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 ServiceNow will offset losses from the drop in ServiceNow'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 |
| ServiceNow vs. Autodesk | ServiceNow vs. Intuit Inc | ServiceNow vs. Zoom Video Communications | ServiceNow vs. Snowflake |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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