Correlation Between Dupont De and Finnair Oyj

Can any of the company-specific risk be diversified away by investing in both Dupont De 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 Dupont De and Finnair Oyj into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Dupont De Nemours and Finnair Oyj, you can compare the effects of market volatilities on Dupont De 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 Dupont De with a short position of Finnair Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dupont De and Finnair Oyj.

Diversification Opportunities for Dupont De and Finnair Oyj

0.12

Correlation Coefficient

Dupont De  Finnair Oyj

Average diversification

The 3 months correlation between Dupont and Finnair is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and Finnair Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Finnair Oyj and Dupont De 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 Dupont De Nemours 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 Dupont De i.e., Dupont De and Finnair Oyj go up and down completely randomly.

Pair Corralation between Dupont De and Finnair Oyj

Allowing for the 90-day total investment horizon Dupont De is expected to generate 8.81 times less return on investment than Finnair Oyj. But when comparing it to its historical volatility, Dupont De Nemours is 12.01 times less risky than Finnair Oyj. It trades about 0.03 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 3, 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 Together
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Dupont De Nemours  vs.  Finnair Oyj

Dupont De Nemours

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dupont De Nemours are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Dupont De is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Finnair Oyj

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Finnair Oyj has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Finnair Oyj is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Dupont De and Finnair Oyj

The main advantage of trading using opposite Dupont De and Finnair Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dupont De 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.

The idea behind Dupont De Nemours and Finnair Oyj pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.