Correlation Between Boston Beer and Finnair Oyj
Can any of the company-specific risk be diversified away by investing in both Boston Beer 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 Boston Beer and Finnair Oyj into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Boston Beer and Finnair Oyj, you can compare the effects of market volatilities on Boston Beer 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 Boston Beer with a short position of Finnair Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Beer and Finnair Oyj.
Diversification Opportunities for Boston Beer and Finnair Oyj
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Boston and Finnair is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Boston Beer and Finnair Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Finnair Oyj and Boston Beer 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 Boston Beer 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 Boston Beer i.e., Boston Beer and Finnair Oyj go up and down completely randomly.
Pair Corralation between Boston Beer and Finnair Oyj
Considering the 90-day investment horizon Boston Beer is expected to under-perform the Finnair Oyj. But the stock apears to be less risky and, when comparing its historical volatility, Boston Beer is 10.08 times less risky than Finnair Oyj. The stock trades about -0.01 of its potential returns per unit of risk. The Finnair Oyj is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 792.00 in Finnair Oyj on September 12, 2024 and sell it today you would lose (567.00) from holding Finnair Oyj or give up 71.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Boston Beer vs. Finnair Oyj
Performance |
| Timeline |
| Boston Beer |
| Finnair Oyj |
Boston Beer and Finnair Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boston Beer and Finnair Oyj
The main advantage of trading using opposite Boston Beer and Finnair Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boston Beer 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.| Boston Beer vs. Anheuser Busch Inbev | Boston Beer vs. Molson Coors Beverage | Boston Beer vs. Heineken NV | Boston Beer vs. Ambev SA ADR |
| 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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