Correlation Between WT Offshore and Finnair Oyj
Can any of the company-specific risk be diversified away by investing in both WT Offshore 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 WT Offshore and Finnair Oyj into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WT Offshore and Finnair Oyj, you can compare the effects of market volatilities on WT Offshore 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 WT Offshore with a short position of Finnair Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of WT Offshore and Finnair Oyj.
Diversification Opportunities for WT Offshore and Finnair Oyj
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between WTI and Finnair is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding WT Offshore and Finnair Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Finnair Oyj and WT Offshore 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 WT Offshore 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 WT Offshore i.e., WT Offshore and Finnair Oyj go up and down completely randomly.
Pair Corralation between WT Offshore and Finnair Oyj
Considering the 90-day investment horizon WT Offshore is expected to under-perform the Finnair Oyj. In addition to that, WT Offshore is 1.66 times more volatile than Finnair Oyj. It trades about -0.03 of its total potential returns per unit of risk. Finnair Oyj is currently generating about 0.04 per unit of volatility. If you would invest 229.00 in Finnair Oyj on October 23, 2024 and sell it today you would earn a total of 6.00 from holding Finnair Oyj or generate 2.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 92.68% |
| Values | Daily Returns |
WT Offshore vs. Finnair Oyj
Performance |
| Timeline |
| WT Offshore |
| Finnair Oyj |
WT Offshore and Finnair Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WT Offshore and Finnair Oyj
The main advantage of trading using opposite WT Offshore and Finnair Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WT Offshore 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.| WT Offshore vs. Evolution Petroleum | WT Offshore vs. Ring Energy | WT Offshore vs. Gran Tierra Energy | WT Offshore vs. Permian Resources |
| 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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