Correlation Between NESTE OYJ and Clean Energy
Can any of the company-specific risk be diversified away by investing in both NESTE OYJ and Clean Energy 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 Clean Energy 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 Clean Energy Fuels, you can compare the effects of market volatilities on NESTE OYJ and Clean Energy 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 Clean Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of NESTE OYJ and Clean Energy.
Diversification Opportunities for NESTE OYJ and Clean Energy
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between NESTE and Clean is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding NESTE OYJ UNSPADR and Clean Energy Fuels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clean Energy Fuels 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 Clean Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clean Energy Fuels has no effect on the direction of NESTE OYJ i.e., NESTE OYJ and Clean Energy go up and down completely randomly.
Pair Corralation between NESTE OYJ and Clean Energy
Assuming the 90 days trading horizon NESTE OYJ is expected to generate 9.76 times less return on investment than Clean Energy. But when comparing it to its historical volatility, NESTE OYJ UNSPADR is 1.23 times less risky than Clean Energy. It trades about 0.01 of its potential returns per unit of risk. Clean Energy Fuels is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 265.00 in Clean Energy Fuels on October 13, 2024 and sell it today you would earn a total of 16.00 from holding Clean Energy Fuels or generate 6.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NESTE OYJ UNSPADR vs. Clean Energy Fuels
Performance |
| Timeline |
| NESTE OYJ UNSPADR |
| Clean Energy Fuels |
NESTE OYJ and Clean Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NESTE OYJ and Clean Energy
The main advantage of trading using opposite NESTE OYJ and Clean Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NESTE OYJ position performs unexpectedly, Clean Energy 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 Clean Energy will offset losses from the drop in Clean Energy's long position.| NESTE OYJ vs. Endeavour Mining PLC | NESTE OYJ vs. GLG LIFE TECH | NESTE OYJ vs. GALENA MINING LTD | NESTE OYJ vs. ASPEN TECHINC DL |
| Clean Energy vs. BOS BETTER ONLINE | Clean Energy vs. ANGLO ASIAN MINING | Clean Energy vs. CSSC Offshore Marine | Clean Energy vs. CarsalesCom |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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