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

0.56

Correlation Coefficient

NESTE OYJ  Clean Energy

Very weak diversification

The 3 months correlation between NESTE and Clean is 0.56. 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 UNSPADR is expected to generate 0.84 times more return on investment than Clean Energy. However, NESTE OYJ UNSPADR is 1.19 times less risky than Clean Energy. It trades about 0.24 of its potential returns per unit of risk. Clean Energy Fuels is currently generating about 0.15 per unit of risk. If you would invest  356.00  in NESTE OYJ UNSPADR on April 21, 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	Weak
Accuracy	100.0%
Values	Daily Returns

NESTE OYJ UNSPADR  vs.  Clean Energy Fuels

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 weak technical and fundamental indicators, NESTE OYJ reported solid returns over the last few months and may actually be approaching a breakup point.

Clean Energy Fuels

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Clean Energy Fuels are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Clean Energy reported solid returns over the last few months and may actually be approaching a breakup point.

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.

The idea behind NESTE OYJ UNSPADR and Clean Energy Fuels 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.