Correlation Between Guidewire Software and Neste Oyj
Can any of the company-specific risk be diversified away by investing in both Guidewire Software and Neste 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 Guidewire Software and Neste Oyj into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Guidewire Software and Neste Oyj, you can compare the effects of market volatilities on Guidewire Software and Neste 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 Guidewire Software with a short position of Neste Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guidewire Software and Neste Oyj.
Diversification Opportunities for Guidewire Software and Neste Oyj
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Guidewire and Neste is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Guidewire Software and Neste Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neste Oyj and Guidewire Software 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 Guidewire Software are associated (or correlated) with Neste Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neste Oyj has no effect on the direction of Guidewire Software i.e., Guidewire Software and Neste Oyj go up and down completely randomly.
Pair Corralation between Guidewire Software and Neste Oyj
Assuming the 90 days trading horizon Guidewire Software is expected to generate 0.85 times more return on investment than Neste Oyj. However, Guidewire Software is 1.17 times less risky than Neste Oyj. It trades about 0.12 of its potential returns per unit of risk. Neste Oyj is currently generating about -0.08 per unit of risk. If you would invest 6,150 in Guidewire Software on September 4, 2024 and sell it today you would earn a total of 12,915 from holding Guidewire Software or generate 210.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Guidewire Software vs. Neste Oyj
Performance |
| Timeline |
| Guidewire Software |
| Neste Oyj |
Guidewire Software and Neste Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guidewire Software and Neste Oyj
The main advantage of trading using opposite Guidewire Software and Neste Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guidewire Software position performs unexpectedly, Neste 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 Neste Oyj will offset losses from the drop in Neste Oyj's long position.| Guidewire Software vs. Apple Inc | Guidewire Software vs. Apple Inc | Guidewire Software vs. Apple Inc | Guidewire Software vs. Apple Inc |
| Neste Oyj vs. Marathon Petroleum Corp | Neste Oyj vs. ENEOS Holdings | Neste Oyj vs. PTT OILRETBUS FOR BA10 |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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