Correlation Between Finnair Oyj and DELHAIZE

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

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

Diversification Opportunities for Finnair Oyj and DELHAIZE

0.35

Correlation Coefficient

Finnair Oyj  DELHAIZE

Weak diversification

The 3 months correlation between Finnair and DELHAIZE is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Finnair Oyj and DELHAIZE GROUP SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DELHAIZE GROUP SA 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 DELHAIZE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DELHAIZE GROUP SA has no effect on the direction of Finnair Oyj i.e., Finnair Oyj and DELHAIZE go up and down completely randomly.

Pair Corralation between Finnair Oyj and DELHAIZE

Assuming the 90 days horizon Finnair Oyj is expected to generate 1.25 times more return on investment than DELHAIZE. However, Finnair Oyj is 1.25 times more volatile than DELHAIZE GROUP SA. It trades about -0.07 of its potential returns per unit of risk. DELHAIZE GROUP SA is currently generating about -0.13 per unit of risk. If you would invest  250.00  in Finnair Oyj on September 13, 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	35.94%
Values	Daily Returns

Finnair Oyj  vs.  DELHAIZE GROUP SA

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.

DELHAIZE GROUP SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DELHAIZE GROUP SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady 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 DELHAIZE GROUP SA investors.

Pair Trading with Finnair Oyj and DELHAIZE

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

The idea behind Finnair Oyj and DELHAIZE GROUP SA 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.