Correlation Between Star Gas and Neste Oyj
Can any of the company-specific risk be diversified away by investing in both Star Gas and Neste 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 Star Gas and Neste Oyj into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Star Gas Partners and Neste Oyj, you can compare the effects of market volatilities on Star Gas and Neste 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 Star Gas with a short position of Neste Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Star Gas and Neste Oyj.
Diversification Opportunities for Star Gas and Neste Oyj
Average diversification
The 3 months correlation between Star and Neste is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Star Gas Partners and Neste Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neste Oyj and Star Gas 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 Star Gas Partners are associated (or correlated) with Neste Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neste Oyj has no effect on the direction of Star Gas i.e., Star Gas and Neste Oyj go up and down completely randomly.
Pair Corralation between Star Gas and Neste Oyj
Considering the 90-day investment horizon Star Gas Partners is expected to generate 0.66 times more return on investment than Neste Oyj. However, Star Gas Partners is 1.52 times less risky than Neste Oyj. It trades about 0.3 of its potential returns per unit of risk. Neste Oyj is currently generating about -0.23 per unit of risk. If you would invest 1,157 in Star Gas Partners on November 18, 2024 and sell it today you would earn a total of 163.00 from holding Star Gas Partners or generate 14.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Star Gas Partners vs. Neste Oyj
Performance |
| Timeline |
| Star Gas Partners |
| Neste Oyj |
Star Gas and Neste Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Star Gas and Neste Oyj
The main advantage of trading using opposite Star Gas and Neste Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Star Gas position performs unexpectedly, Neste 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 Neste Oyj will offset losses from the drop in Neste Oyj's long position.| Star Gas vs. Ultrapar Participacoes SA | Star Gas vs. Par Pacific Holdings | Star Gas vs. Delek Energy | Star Gas vs. Crossamerica Partners LP |
| Neste Oyj vs. Icahn Enterprises LP | Neste Oyj vs. Star Gas Partners | Neste Oyj vs. Ultrapar Participacoes SA | Neste Oyj vs. Par Pacific Holdings |
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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