Correlation Between Finnair Oyj and Skechers USA
Can any of the company-specific risk be diversified away by investing in both Finnair Oyj and Skechers USA 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 Skechers USA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Finnair Oyj and Skechers USA, you can compare the effects of market volatilities on Finnair Oyj and Skechers USA 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 Skechers USA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Finnair Oyj and Skechers USA.
Diversification Opportunities for Finnair Oyj and Skechers USA
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Finnair and Skechers is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Finnair Oyj and Skechers USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Skechers USA 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 Skechers USA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Skechers USA has no effect on the direction of Finnair Oyj i.e., Finnair Oyj and Skechers USA go up and down completely randomly.
Pair Corralation between Finnair Oyj and Skechers USA
Assuming the 90 days horizon Finnair Oyj is expected to generate 9.71 times more return on investment than Skechers USA. However, Finnair Oyj is 9.71 times more volatile than Skechers USA. It trades about 0.03 of its potential returns per unit of risk. Skechers USA is currently generating about 0.06 per unit of risk. If you would invest 666.00 in Finnair Oyj on September 4, 2024 and sell it today you would lose (433.00) from holding Finnair Oyj or give up 65.02% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Finnair Oyj vs. Skechers USA
Performance |
| Timeline |
| Finnair Oyj |
| Skechers USA |
Finnair Oyj and Skechers USA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Finnair Oyj and Skechers USA
The main advantage of trading using opposite Finnair Oyj and Skechers USA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Finnair Oyj position performs unexpectedly, Skechers USA 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 Skechers USA will offset losses from the drop in Skechers USA'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 |
| Skechers USA vs. On Holding | Skechers USA vs. Steven Madden | Skechers USA vs. Crocs Inc | Skechers USA vs. Designer Brands |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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