Correlation Between Phillips and NESTE OYJ

Can any of the company-specific risk be diversified away by investing in both Phillips 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 Phillips and NESTE OYJ into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Phillips 66 and NESTE OYJ UNSPADR, you can compare the effects of market volatilities on Phillips 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 Phillips with a short position of NESTE OYJ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Phillips and NESTE OYJ.

Diversification Opportunities for Phillips and NESTE OYJ

0.78

Correlation Coefficient

Phillips  NESTE OYJ

Poor diversification

The 3 months correlation between Phillips and NESTE is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Phillips 66 and NESTE OYJ UNSPADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NESTE OYJ UNSPADR and Phillips 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 Phillips 66 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 UNSPADR has no effect on the direction of Phillips i.e., Phillips and NESTE OYJ go up and down completely randomly.

Pair Corralation between Phillips and NESTE OYJ

Assuming the 90 days horizon Phillips is expected to generate 2.43 times less return on investment than NESTE OYJ. But when comparing it to its historical volatility, Phillips 66 is 1.59 times less risky than NESTE OYJ. It trades about 0.16 of its potential returns per unit of risk. NESTE OYJ UNSPADR is currently generating about 0.24 of returns per unit of risk over similar time horizon. 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

Phillips 66  vs.  NESTE OYJ UNSPADR

Phillips 66

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Phillips 66 are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Phillips reported solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Phillips and NESTE OYJ

The main advantage of trading using opposite Phillips and NESTE OYJ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Phillips 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.

The idea behind Phillips 66 and NESTE OYJ UNSPADR 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.