Correlation Between Fortum Oyj and Fortum Oyj
Can any of the company-specific risk be diversified away by investing in both Fortum Oyj and Fortum Oyj 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 Fortum Oyj and Fortum Oyj into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fortum Oyj ADR and Fortum Oyj, you can compare the effects of market volatilities on Fortum Oyj and Fortum Oyj 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 Fortum Oyj with a short position of Fortum Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortum Oyj and Fortum Oyj.
Diversification Opportunities for Fortum Oyj and Fortum Oyj
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Fortum and Fortum is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Fortum Oyj ADR and Fortum Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortum Oyj and Fortum 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 Fortum Oyj ADR are associated (or correlated) with Fortum Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortum Oyj has no effect on the direction of Fortum Oyj i.e., Fortum Oyj and Fortum Oyj go up and down completely randomly.
Pair Corralation between Fortum Oyj and Fortum Oyj
Assuming the 90 days horizon Fortum Oyj ADR is expected to generate 1.82 times more return on investment than Fortum Oyj. However, Fortum Oyj is 1.82 times more volatile than Fortum Oyj. It trades about 0.0 of its potential returns per unit of risk. Fortum Oyj is currently generating about -0.12 per unit of risk. If you would invest 292.00 in Fortum Oyj ADR on August 30, 2024 and sell it today you would lose (2.00) from holding Fortum Oyj ADR or give up 0.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fortum Oyj ADR vs. Fortum Oyj
Performance |
| Timeline |
| Fortum Oyj ADR |
| Fortum Oyj |
Fortum Oyj and Fortum Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fortum Oyj and Fortum Oyj
The main advantage of trading using opposite Fortum Oyj and Fortum Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortum Oyj position performs unexpectedly, Fortum Oyj 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 Fortum Oyj will offset losses from the drop in Fortum Oyj's long position.| Fortum Oyj vs. Atlantica Sustainable Infrastructure | Fortum Oyj vs. Clearway Energy | Fortum Oyj vs. Brookfield Renewable Corp | Fortum Oyj vs. Nextera Energy Partners |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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