Correlation Between Spirent Communications and Finnair Oyj
Can any of the company-specific risk be diversified away by investing in both Spirent Communications 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 Spirent Communications and Finnair Oyj into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spirent Communications plc and Finnair Oyj, you can compare the effects of market volatilities on Spirent Communications 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 Spirent Communications with a short position of Finnair Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spirent Communications and Finnair Oyj.
Diversification Opportunities for Spirent Communications and Finnair Oyj
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Spirent and Finnair is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Spirent Communications plc and Finnair Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Finnair Oyj and Spirent Communications 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 Spirent Communications 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 Spirent Communications i.e., Spirent Communications and Finnair Oyj go up and down completely randomly.
Pair Corralation between Spirent Communications and Finnair Oyj
Assuming the 90 days trading horizon Spirent Communications is expected to generate 1.02 times less return on investment than Finnair Oyj. But when comparing it to its historical volatility, Spirent Communications plc is 1.83 times less risky than Finnair Oyj. It trades about 0.32 of its potential returns per unit of risk. Finnair Oyj is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 234.00 in Finnair Oyj on November 7, 2024 and sell it today you would earn a total of 16.00 from holding Finnair Oyj or generate 6.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Spirent Communications plc vs. Finnair Oyj
Performance |
| Timeline |
| Spirent Communications |
| Finnair Oyj |
Spirent Communications and Finnair Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spirent Communications and Finnair Oyj
The main advantage of trading using opposite Spirent Communications and Finnair Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spirent Communications 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.| Spirent Communications vs. Seraphim Space Investment | Spirent Communications vs. Canadian General Investments | Spirent Communications vs. EJF Investments | Spirent Communications vs. Cellnex Telecom SA |
| Finnair Oyj vs. Cellnex Telecom SA | Finnair Oyj vs. Pan American Silver | Finnair Oyj vs. iShares Physical Silver | Finnair Oyj vs. Anglo Asian Mining |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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