Correlation Between Finnair Oyj and Sapiens International
Can any of the company-specific risk be diversified away by investing in both Finnair Oyj and Sapiens International 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 Sapiens International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Finnair Oyj and Sapiens International, you can compare the effects of market volatilities on Finnair Oyj and Sapiens International 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 Sapiens International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Finnair Oyj and Sapiens International.
Diversification Opportunities for Finnair Oyj and Sapiens International
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Finnair and Sapiens is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Finnair Oyj and Sapiens International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sapiens International 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 Sapiens International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sapiens International has no effect on the direction of Finnair Oyj i.e., Finnair Oyj and Sapiens International go up and down completely randomly.
Pair Corralation between Finnair Oyj and Sapiens International
Assuming the 90 days horizon Finnair Oyj is expected to generate 11.0 times more return on investment than Sapiens International. However, Finnair Oyj is 11.0 times more volatile than Sapiens International. It trades about 0.04 of its potential returns per unit of risk. Sapiens International is currently generating about 0.03 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 Together |
| Strength | Very Strong |
| Accuracy | 99.6% |
| Values | Daily Returns |
Finnair Oyj vs. Sapiens International
Performance |
| Timeline |
| Finnair Oyj |
| Sapiens International |
Finnair Oyj and Sapiens International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Finnair Oyj and Sapiens International
The main advantage of trading using opposite Finnair Oyj and Sapiens International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Finnair Oyj position performs unexpectedly, Sapiens International 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 Sapiens International will offset losses from the drop in Sapiens International'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 |
| Sapiens International vs. PROS Holdings | Sapiens International vs. Meridianlink | Sapiens International vs. Enfusion | Sapiens International vs. PDF Solutions |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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