Correlation Between Neste Oyj and UNITED UTILITIES
Can any of the company-specific risk be diversified away by investing in both Neste Oyj and UNITED UTILITIES 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 Neste Oyj and UNITED UTILITIES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Neste Oyj and UNITED UTILITIES GR, you can compare the effects of market volatilities on Neste Oyj and UNITED UTILITIES 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 Neste Oyj with a short position of UNITED UTILITIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Neste Oyj and UNITED UTILITIES.
Diversification Opportunities for Neste Oyj and UNITED UTILITIES
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Neste and UNITED is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Neste Oyj and UNITED UTILITIES GR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNITED UTILITIES and Neste 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 Neste Oyj are associated (or correlated) with UNITED UTILITIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UNITED UTILITIES has no effect on the direction of Neste Oyj i.e., Neste Oyj and UNITED UTILITIES go up and down completely randomly.
Pair Corralation between Neste Oyj and UNITED UTILITIES
Assuming the 90 days horizon Neste Oyj is expected to under-perform the UNITED UTILITIES. In addition to that, Neste Oyj is 2.18 times more volatile than UNITED UTILITIES GR. It trades about -0.03 of its total potential returns per unit of risk. UNITED UTILITIES GR is currently generating about 0.38 per unit of volatility. If you would invest 1,195 in UNITED UTILITIES GR on September 1, 2024 and sell it today you would earn a total of 145.00 from holding UNITED UTILITIES GR or generate 12.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Neste Oyj vs. UNITED UTILITIES GR
Performance |
| Timeline |
| Neste Oyj |
| UNITED UTILITIES |
Neste Oyj and UNITED UTILITIES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Neste Oyj and UNITED UTILITIES
The main advantage of trading using opposite Neste Oyj and UNITED UTILITIES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Neste Oyj position performs unexpectedly, UNITED UTILITIES 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 UNITED UTILITIES will offset losses from the drop in UNITED UTILITIES's long position.| Neste Oyj vs. Astral Foods Limited | Neste Oyj vs. Tyson Foods | Neste Oyj vs. Lifeway Foods | Neste Oyj vs. UNIVERSAL MUSIC GROUP |
| UNITED UTILITIES vs. Soken Chemical Engineering | UNITED UTILITIES vs. EAGLE MATERIALS | UNITED UTILITIES vs. GEAR4MUSIC LS 10 | UNITED UTILITIES vs. Siamgas And Petrochemicals |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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