Correlation Between NESTE OYJ and Magna International

Can any of the company-specific risk be diversified away by investing in both NESTE OYJ and Magna International 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 Magna International 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 Magna International, you can compare the effects of market volatilities on NESTE OYJ and Magna International 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 Magna International. Check out your portfolio center. Please also check ongoing floating volatility patterns of NESTE OYJ and Magna International.

Diversification Opportunities for NESTE OYJ and Magna International

0.66

Correlation Coefficient

NESTE OYJ  Magna International

Poor diversification

The 3 months correlation between NESTE and Magna is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding NESTE OYJ UNSPADR and Magna International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magna International 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 Magna International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magna International has no effect on the direction of NESTE OYJ i.e., NESTE OYJ and Magna International go up and down completely randomly.

Pair Corralation between NESTE OYJ and Magna International

Assuming the 90 days trading horizon NESTE OYJ UNSPADR is expected to generate 1.9 times more return on investment than Magna International. However, NESTE OYJ is 1.9 times more volatile than Magna International. It trades about 0.24 of its potential returns per unit of risk. Magna International is currently generating about 0.23 per unit of risk. If you would invest  356.00  in NESTE OYJ UNSPADR on April 20, 2025 and sell it today you would earn a total of  244.00  from holding NESTE OYJ UNSPADR or generate 68.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

NESTE OYJ UNSPADR  vs.  Magna International

NESTE OYJ UNSPADR

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in NESTE OYJ UNSPADR are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, NESTE OYJ reported solid returns over the last few months and may actually be approaching a breakup point.

Magna International

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Magna International are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Magna International reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NESTE OYJ and Magna International

The main advantage of trading using opposite NESTE OYJ and Magna International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NESTE OYJ position performs unexpectedly, Magna International 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 Magna International will offset losses from the drop in Magna International's long position.

The idea behind NESTE OYJ UNSPADR and Magna International 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.

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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.