Correlation Between Small Cap and Finnair Oyj
Can any of the company-specific risk be diversified away by investing in both Small Cap 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 Small Cap and Finnair Oyj into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Small Cap Premium and Finnair Oyj, you can compare the effects of market volatilities on Small Cap 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 Small Cap with a short position of Finnair Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small Cap and Finnair Oyj.
Diversification Opportunities for Small Cap and Finnair Oyj
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Small and Finnair is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Small Cap Premium and Finnair Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Finnair Oyj and Small Cap 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 Small Cap Premium 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 Small Cap i.e., Small Cap and Finnair Oyj go up and down completely randomly.
Pair Corralation between Small Cap and Finnair Oyj
Considering the 90-day investment horizon Small Cap is expected to generate 10.78 times less return on investment than Finnair Oyj. But when comparing it to its historical volatility, Small Cap Premium is 38.03 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 0.03 of returns per unit of risk over similar time horizon. If you would invest 749.00 in Finnair Oyj on September 2, 2024 and sell it today you would lose (516.00) from holding Finnair Oyj or give up 68.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Small Cap Premium vs. Finnair Oyj
Performance |
| Timeline |
| Small Cap Premium |
| Finnair Oyj |
Small Cap and Finnair Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Small Cap and Finnair Oyj
The main advantage of trading using opposite Small Cap and Finnair Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small Cap 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.| Small Cap vs. RiverNorth Specialty Finance | Small Cap vs. Royce Micro Cap | Small Cap vs. First Trust Enhanced | Small Cap vs. Voya Global Advantage |
| Finnair Oyj vs. easyJet plc | Finnair Oyj vs. Norse Atlantic ASA | Finnair Oyj vs. Air New Zealand | Finnair Oyj vs. Air China Limited |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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