Correlation Between MASSACHUSETTS and Finnair Oyj

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

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

Diversification Opportunities for MASSACHUSETTS and Finnair Oyj

0.22

Correlation Coefficient

MASSACHUSETTS  Finnair Oyj

Modest diversification

The 3 months correlation between MASSACHUSETTS and Finnair is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding MASSACHUSETTS INST TECHNOLOGY and Finnair Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Finnair Oyj and MASSACHUSETTS 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 MASSACHUSETTS INST TECHNOLOGY 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 MASSACHUSETTS i.e., MASSACHUSETTS and Finnair Oyj go up and down completely randomly.

Pair Corralation between MASSACHUSETTS and Finnair Oyj

Assuming the 90 days trading horizon MASSACHUSETTS INST TECHNOLOGY is expected to under-perform the Finnair Oyj. But the bond apears to be less risky and, when comparing its historical volatility, MASSACHUSETTS INST TECHNOLOGY is 1.31 times less risky than Finnair Oyj. The bond trades about -0.01 of its potential returns per unit of risk. The Finnair Oyj is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  250.00  in Finnair Oyj on September 21, 2024 and sell it today you would earn a total of  0.00  from holding Finnair Oyj or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	90.63%
Values	Daily Returns

MASSACHUSETTS INST TECHNOLOGY  vs.  Finnair Oyj

MASSACHUSETTS INST

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MASSACHUSETTS INST TECHNOLOGY has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, MASSACHUSETTS is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

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 MASSACHUSETTS and Finnair Oyj

The main advantage of trading using opposite MASSACHUSETTS and Finnair Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MASSACHUSETTS 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 MASSACHUSETTS INST TECHNOLOGY 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 Stocks Directory module to find actively traded stocks across global markets.