Correlation Between Sphere Entertainment and Finnair Oyj

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

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

Diversification Opportunities for Sphere Entertainment and Finnair Oyj

0.59

Correlation Coefficient

Sphere Entertainment  Finnair Oyj

Very weak diversification

The 3 months correlation between Sphere and Finnair is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Sphere Entertainment Co and Finnair Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Finnair Oyj and Sphere Entertainment 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 Sphere Entertainment Co 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 Sphere Entertainment i.e., Sphere Entertainment and Finnair Oyj go up and down completely randomly.

Pair Corralation between Sphere Entertainment and Finnair Oyj

Given the investment horizon of 90 days Sphere Entertainment Co is expected to under-perform the Finnair Oyj. But the stock apears to be less risky and, when comparing its historical volatility, Sphere Entertainment Co is 1.22 times less risky than Finnair Oyj. The stock trades about -0.29 of its potential returns per unit of risk. The Finnair Oyj is currently generating about 0.17 of returns per unit of risk over similar time horizon. 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

Sphere Entertainment Co  vs.  Finnair Oyj

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.

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 Sphere Entertainment and Finnair Oyj

The main advantage of trading using opposite Sphere Entertainment and Finnair Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sphere Entertainment 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 Sphere Entertainment Co 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.