Correlation Between Finnair Oyj and Ralph Lauren
Can any of the company-specific risk be diversified away by investing in both Finnair Oyj and Ralph Lauren 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 Ralph Lauren into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Finnair Oyj and Ralph Lauren Corp, you can compare the effects of market volatilities on Finnair Oyj and Ralph Lauren 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 Ralph Lauren. Check out your portfolio center. Please also check ongoing floating volatility patterns of Finnair Oyj and Ralph Lauren.
Diversification Opportunities for Finnair Oyj and Ralph Lauren
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Finnair and Ralph is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Finnair Oyj and Ralph Lauren Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ralph Lauren 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 Ralph Lauren. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ralph Lauren Corp has no effect on the direction of Finnair Oyj i.e., Finnair Oyj and Ralph Lauren go up and down completely randomly.
Pair Corralation between Finnair Oyj and Ralph Lauren
Assuming the 90 days horizon Finnair Oyj is expected to generate 10.12 times more return on investment than Ralph Lauren. However, Finnair Oyj is 10.12 times more volatile than Ralph Lauren Corp. It trades about 0.03 of its potential returns per unit of risk. Ralph Lauren Corp is currently generating about 0.09 per unit of risk. If you would invest 742.00 in Finnair Oyj on September 4, 2024 and sell it today you would lose (509.00) from holding Finnair Oyj or give up 68.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Finnair Oyj vs. Ralph Lauren Corp
Performance |
| Timeline |
| Finnair Oyj |
| Ralph Lauren Corp |
Finnair Oyj and Ralph Lauren Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Finnair Oyj and Ralph Lauren
The main advantage of trading using opposite Finnair Oyj and Ralph Lauren positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Finnair Oyj position performs unexpectedly, Ralph Lauren 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 Ralph Lauren will offset losses from the drop in Ralph Lauren'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 |
| Ralph Lauren vs. VF Corporation | Ralph Lauren vs. Levi Strauss Co | Ralph Lauren vs. Under Armour A | Ralph Lauren vs. Columbia Sportswear |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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