Correlation Between Pentair PLC and Finnair Oyj
Can any of the company-specific risk be diversified away by investing in both Pentair PLC 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 Pentair PLC and Finnair Oyj into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pentair PLC and Finnair Oyj, you can compare the effects of market volatilities on Pentair PLC 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 Pentair PLC with a short position of Finnair Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pentair PLC and Finnair Oyj.
Diversification Opportunities for Pentair PLC and Finnair Oyj
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Pentair and Finnair is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Pentair PLC and Finnair Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Finnair Oyj and Pentair PLC 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 Pentair PLC 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 Pentair PLC i.e., Pentair PLC and Finnair Oyj go up and down completely randomly.
Pair Corralation between Pentair PLC and Finnair Oyj
Considering the 90-day investment horizon Pentair PLC is expected to generate 8.58 times less return on investment than Finnair Oyj. But when comparing it to its historical volatility, Pentair PLC is 16.22 times less risky than Finnair Oyj. It trades about 0.09 of its potential returns per unit of risk. Finnair Oyj is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 200.00 in Finnair Oyj on November 9, 2024 and sell it today you would earn a total of 50.00 from holding Finnair Oyj or generate 25.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.52% |
| Values | Daily Returns |
Pentair PLC vs. Finnair Oyj
Performance |
| Timeline |
| Pentair PLC |
| Finnair Oyj |
Pentair PLC and Finnair Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pentair PLC and Finnair Oyj
The main advantage of trading using opposite Pentair PLC and Finnair Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pentair PLC 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.| Pentair PLC vs. Illinois Tool Works | Pentair PLC vs. Parker Hannifin | Pentair PLC vs. Emerson Electric | Pentair PLC vs. Smith AO |
| Finnair Oyj vs. Air Canada | Finnair Oyj vs. Dana Inc | Finnair Oyj vs. Fbec Worldwide | Finnair Oyj vs. Hill Street Beverage |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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