Correlation Between Neste Oyj and BP Prudhoe

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Neste Oyj and BP Prudhoe 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 BP Prudhoe into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Neste Oyj and BP Prudhoe Bay, you can compare the effects of market volatilities on Neste Oyj and BP Prudhoe 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 BP Prudhoe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Neste Oyj and BP Prudhoe.

Diversification Opportunities for Neste Oyj and BP Prudhoe

0.58
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Neste and BPT is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Neste Oyj and BP Prudhoe Bay in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BP Prudhoe Bay 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 are associated (or correlated) with BP Prudhoe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BP Prudhoe Bay has no effect on the direction of Neste Oyj i.e., Neste Oyj and BP Prudhoe go up and down completely randomly.

Pair Corralation between Neste Oyj and BP Prudhoe

Assuming the 90 days horizon Neste Oyj is expected to generate 0.4 times more return on investment than BP Prudhoe. However, Neste Oyj is 2.52 times less risky than BP Prudhoe. It trades about 0.08 of its potential returns per unit of risk. BP Prudhoe Bay is currently generating about 0.0 per unit of risk. If you would invest  1,357  in Neste Oyj on January 25, 2024 and sell it today you would earn a total of  47.00  from holding Neste Oyj or generate 3.46% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Neste Oyj  vs.  BP Prudhoe Bay

 Performance 
       Timeline  
Neste Oyj 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Neste Oyj has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long term up-swing for the company investors.
BP Prudhoe Bay 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days BP Prudhoe Bay has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in May 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Neste Oyj and BP Prudhoe Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Neste Oyj and BP Prudhoe

The main advantage of trading using opposite Neste Oyj and BP Prudhoe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Neste Oyj position performs unexpectedly, BP Prudhoe 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 BP Prudhoe will offset losses from the drop in BP Prudhoe's long position.
The idea behind Neste Oyj and BP Prudhoe Bay pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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.

Other Complementary Tools

ETF Categories
List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments
Crypto Correlations
Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins
Price Ceiling Movement
Calculate and plot Price Ceiling Movement for different equity instruments
Cryptocurrency Center
Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency
Price Exposure Probability
Analyze equity upside and downside potential for a given time horizon across multiple markets