Correlation Between NESTE OYJ and Big 5
Can any of the company-specific risk be diversified away by investing in both NESTE OYJ and Big 5 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 Big 5 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 Big 5 Sporting, you can compare the effects of market volatilities on NESTE OYJ and Big 5 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 Big 5. Check out your portfolio center. Please also check ongoing floating volatility patterns of NESTE OYJ and Big 5.
Diversification Opportunities for NESTE OYJ and Big 5
Weak diversification
The 3 months correlation between NESTE and Big is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding NESTE OYJ UNSPADR and Big 5 Sporting in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Big 5 Sporting 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 Big 5. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Big 5 Sporting has no effect on the direction of NESTE OYJ i.e., NESTE OYJ and Big 5 go up and down completely randomly.
Pair Corralation between NESTE OYJ and Big 5
Assuming the 90 days trading horizon NESTE OYJ UNSPADR is expected to generate 0.62 times more return on investment than Big 5. However, NESTE OYJ UNSPADR is 1.6 times less risky than Big 5. It trades about -0.02 of its potential returns per unit of risk. Big 5 Sporting is currently generating about -0.1 per unit of risk. If you would invest 700.00 in NESTE OYJ UNSPADR on August 29, 2024 and sell it today you would lose (15.00) from holding NESTE OYJ UNSPADR or give up 2.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NESTE OYJ UNSPADR vs. Big 5 Sporting
Performance |
| Timeline |
| NESTE OYJ UNSPADR |
| Big 5 Sporting |
NESTE OYJ and Big 5 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NESTE OYJ and Big 5
The main advantage of trading using opposite NESTE OYJ and Big 5 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NESTE OYJ position performs unexpectedly, Big 5 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 Big 5 will offset losses from the drop in Big 5's long position.| NESTE OYJ vs. Corsair Gaming | NESTE OYJ vs. Westinghouse Air Brake | NESTE OYJ vs. Transport International Holdings | NESTE OYJ vs. Alaska Air Group |
| Big 5 vs. FANDIFI TECHNOLOGY P | Big 5 vs. ScanSource | Big 5 vs. Vishay Intertechnology | Big 5 vs. PT Global Mediacom |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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