Correlation Between NESTE OYJ and Par Pacific
Can any of the company-specific risk be diversified away by investing in both NESTE OYJ and Par Pacific 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 Par Pacific into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NESTE OYJ UNSPADR and Par Pacific Holdings, you can compare the effects of market volatilities on NESTE OYJ and Par Pacific 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 Par Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of NESTE OYJ and Par Pacific.
Diversification Opportunities for NESTE OYJ and Par Pacific
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NESTE and Par is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding NESTE OYJ UNSPADR and Par Pacific Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Par Pacific Holdings 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 UNSPADR are associated (or correlated) with Par Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Par Pacific Holdings has no effect on the direction of NESTE OYJ i.e., NESTE OYJ and Par Pacific go up and down completely randomly.
Pair Corralation between NESTE OYJ and Par Pacific
Assuming the 90 days trading horizon NESTE OYJ UNSPADR is expected to under-perform the Par Pacific. In addition to that, NESTE OYJ is 1.2 times more volatile than Par Pacific Holdings. It trades about -0.06 of its total potential returns per unit of risk. Par Pacific Holdings is currently generating about 0.32 per unit of volatility. If you would invest 1,400 in Par Pacific Holdings on September 2, 2024 and sell it today you would earn a total of 230.00 from holding Par Pacific Holdings or generate 16.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NESTE OYJ UNSPADR vs. Par Pacific Holdings
Performance |
| Timeline |
| NESTE OYJ UNSPADR |
| Par Pacific Holdings |
NESTE OYJ and Par Pacific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NESTE OYJ and Par Pacific
The main advantage of trading using opposite NESTE OYJ and Par Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NESTE OYJ position performs unexpectedly, Par Pacific 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 Par Pacific will offset losses from the drop in Par Pacific's long position.| NESTE OYJ vs. Superior Plus Corp | NESTE OYJ vs. NMI Holdings | NESTE OYJ vs. Origin Agritech | NESTE OYJ vs. SIVERS SEMICONDUCTORS AB |
| Par Pacific vs. Global Ship Lease | Par Pacific vs. G III Apparel Group | Par Pacific vs. Lendlease Group | Par Pacific vs. UNITED RENTALS |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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