Correlation Between United and Finnair Oyj

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

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

Diversification Opportunities for United and Finnair Oyj

0.33

Correlation Coefficient

United  Finnair Oyj

Weak diversification

The 3 months correlation between United and Finnair is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding United States Cellular and Finnair Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Finnair Oyj and United 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 United States Cellular 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 United i.e., United and Finnair Oyj go up and down completely randomly.

Pair Corralation between United and Finnair Oyj

Assuming the 90 days trading horizon United States Cellular is expected to under-perform the Finnair Oyj. But the bond apears to be less risky and, when comparing its historical volatility, United States Cellular is 1.31 times less risky than Finnair Oyj. The bond trades about -0.11 of its potential returns per unit of risk. The Finnair Oyj is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  250.00  in Finnair Oyj on September 5, 2024 and sell it today you would lose (25.00) from holding Finnair Oyj or give up 10.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	92.31%
Values	Daily Returns

United States Cellular  vs.  Finnair Oyj

United States Cellular

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days United States Cellular has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for United States Cellular 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 latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with United and Finnair Oyj

The main advantage of trading using opposite United and Finnair Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United 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 United States Cellular 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.