Correlation Between Fortum Oyj and Finnair Oyj
Can any of the company-specific risk be diversified away by investing in both Fortum Oyj and Finnair 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 Finnair Oyj into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fortum Oyj and Finnair Oyj, you can compare the effects of market volatilities on Fortum Oyj and Finnair 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 Finnair Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortum Oyj and Finnair Oyj.
Diversification Opportunities for Fortum Oyj and Finnair Oyj
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Fortum and Finnair is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Fortum Oyj and Finnair Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Finnair 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 are associated (or correlated) with Finnair Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Finnair Oyj has no effect on the direction of Fortum Oyj i.e., Fortum Oyj and Finnair Oyj go up and down completely randomly.
Pair Corralation between Fortum Oyj and Finnair Oyj
Assuming the 90 days trading horizon Fortum Oyj is expected to generate 0.43 times more return on investment than Finnair Oyj. However, Fortum Oyj is 2.31 times less risky than Finnair Oyj. It trades about 0.03 of its potential returns per unit of risk. Finnair Oyj is currently generating about -0.06 per unit of risk. If you would invest 1,250 in Fortum Oyj on September 3, 2024 and sell it today you would earn a total of 177.00 from holding Fortum Oyj or generate 14.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fortum Oyj vs. Finnair Oyj
Performance |
| Timeline |
| Fortum Oyj |
| Finnair Oyj |
Fortum Oyj and Finnair Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fortum Oyj and Finnair Oyj
The main advantage of trading using opposite Fortum Oyj and Finnair Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortum Oyj position performs unexpectedly, Finnair 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 Finnair Oyj will offset losses from the drop in Finnair Oyj's long position.| Fortum Oyj vs. Detection Technology OY | Fortum Oyj vs. HKFoods Oyj A | Fortum Oyj vs. United Bankers Oyj | Fortum Oyj vs. Alma Media Oyj |
| Finnair Oyj vs. Fortum Oyj | Finnair Oyj vs. Nordea Bank Abp | Finnair Oyj vs. Sampo Oyj A | Finnair Oyj vs. Neste Oil Oyj |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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