Correlation Between Neste Oil and Finnair Oyj
Can any of the company-specific risk be diversified away by investing in both Neste Oil and Finnair 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 Neste Oil and Finnair Oyj into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Neste Oil Oyj and Finnair Oyj, you can compare the effects of market volatilities on Neste Oil and Finnair 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 Neste Oil with a short position of Finnair Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Neste Oil and Finnair Oyj.
Diversification Opportunities for Neste Oil and Finnair Oyj
-0.89 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Neste and Finnair is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding Neste Oil Oyj and Finnair Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Finnair Oyj and Neste Oil 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 Oil Oyj are associated (or correlated) with Finnair Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Finnair Oyj has no effect on the direction of Neste Oil i.e., Neste Oil and Finnair Oyj go up and down completely randomly.
Pair Corralation between Neste Oil and Finnair Oyj
Assuming the 90 days trading horizon Neste Oil Oyj is expected to under-perform the Finnair Oyj. But the stock apears to be less risky and, when comparing its historical volatility, Neste Oil Oyj is 1.48 times less risky than Finnair Oyj. The stock trades about -0.5 of its potential returns per unit of risk. The Finnair Oyj is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest 251.00 in Finnair Oyj on December 1, 2024 and sell it today you would earn a total of 102.00 from holding Finnair Oyj or generate 40.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Neste Oil Oyj vs. Finnair Oyj
Performance |
| Timeline |
| Neste Oil Oyj |
| Finnair Oyj |
Neste Oil and Finnair Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Neste Oil and Finnair Oyj
The main advantage of trading using opposite Neste Oil and Finnair Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Neste Oil position performs unexpectedly, Finnair 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 Finnair Oyj will offset losses from the drop in Finnair Oyj's long position.| Neste Oil vs. Fortum Oyj | Neste Oil vs. Sampo Oyj A | Neste Oil vs. Nordea Bank Abp | Neste Oil vs. UPM Kymmene Oyj |
| Finnair Oyj vs. Fortum Oyj | Finnair Oyj vs. Nordea Bank Abp | Finnair Oyj vs. Sampo Oyj A | Finnair Oyj vs. Neste Oil Oyj |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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