Correlation Between Finnair Oyj and Sphere Entertainment

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

By analyzing existing cross correlation between Finnair Oyj and Sphere Entertainment Co, you can compare the effects of market volatilities on Finnair Oyj and Sphere Entertainment 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 Sphere Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Finnair Oyj and Sphere Entertainment.

Diversification Opportunities for Finnair Oyj and Sphere Entertainment

0.59

Correlation Coefficient

Finnair Oyj  Sphere Entertainment

Very weak diversification

The 3 months correlation between Finnair and Sphere is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Finnair Oyj and Sphere Entertainment Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sphere Entertainment 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 Sphere Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sphere Entertainment has no effect on the direction of Finnair Oyj i.e., Finnair Oyj and Sphere Entertainment go up and down completely randomly.

Pair Corralation between Finnair Oyj and Sphere Entertainment

Assuming the 90 days horizon Finnair Oyj is expected to generate 1.22 times more return on investment than Sphere Entertainment. However, Finnair Oyj is 1.22 times more volatile than Sphere Entertainment Co. It trades about 0.17 of its potential returns per unit of risk. Sphere Entertainment Co is currently generating about -0.29 per unit of risk. If you would invest  229.00  in Finnair Oyj on September 21, 2024 and sell it today you would earn a total of  21.00  from holding Finnair Oyj or generate 9.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Finnair Oyj  vs.  Sphere Entertainment Co

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.

Sphere Entertainment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sphere Entertainment Co has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unfluctuating performance, the Stock's technical indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Finnair Oyj and Sphere Entertainment

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

The idea behind Finnair Oyj and Sphere Entertainment Co 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.