Correlation Between Finnair Oyj and Volato

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

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

Diversification Opportunities for Finnair Oyj and Volato

0.0

Correlation Coefficient

Finnair Oyj  Volato

Pay attention - limited upside

The 3 months correlation between Finnair and Volato is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Finnair Oyj and Volato Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Volato Group and Finnair Oyj 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 Finnair Oyj are associated (or correlated) with Volato. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Volato Group has no effect on the direction of Finnair Oyj i.e., Finnair Oyj and Volato go up and down completely randomly.

Pair Corralation between Finnair Oyj and Volato

Assuming the 90 days horizon Finnair Oyj is expected to generate 0.34 times more return on investment than Volato. However, Finnair Oyj is 2.94 times less risky than Volato. It trades about 0.01 of its potential returns per unit of risk. Volato Group is currently generating about -0.25 per unit of risk. If you would invest  250.00  in Finnair Oyj on October 27, 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	Flat
Strength	Insignificant
Accuracy	90.48%
Values	Daily Returns

Finnair Oyj  vs.  Volato Group

Finnair Oyj

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Finnair Oyj are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Volato Group

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Volato Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting basic indicators, Volato reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Finnair Oyj and Volato

The main advantage of trading using opposite Finnair Oyj and Volato positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Finnair Oyj position performs unexpectedly, Volato 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 Volato will offset losses from the drop in Volato's long position.

The idea behind Finnair Oyj and Volato Group 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.

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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.