Correlation Between Aldel Financial and Newpark Resources
Can any of the company-specific risk be diversified away by investing in both Aldel Financial and Newpark Resources 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 Aldel Financial and Newpark Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aldel Financial II and Newpark Resources, you can compare the effects of market volatilities on Aldel Financial and Newpark Resources 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 Aldel Financial with a short position of Newpark Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aldel Financial and Newpark Resources.
Diversification Opportunities for Aldel Financial and Newpark Resources
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Aldel and Newpark is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Aldel Financial II and Newpark Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newpark Resources and Aldel Financial 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 Aldel Financial II are associated (or correlated) with Newpark Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newpark Resources has no effect on the direction of Aldel Financial i.e., Aldel Financial and Newpark Resources go up and down completely randomly.
Pair Corralation between Aldel Financial and Newpark Resources
Assuming the 90 days horizon Aldel Financial is expected to generate 59.15 times less return on investment than Newpark Resources. But when comparing it to its historical volatility, Aldel Financial II is 27.39 times less risky than Newpark Resources. It trades about 0.12 of its potential returns per unit of risk. Newpark Resources is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 681.00 in Newpark Resources on August 28, 2024 and sell it today you would earn a total of 125.00 from holding Newpark Resources or generate 18.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aldel Financial II vs. Newpark Resources
Performance |
| Timeline |
| Aldel Financial II |
| Newpark Resources |
Aldel Financial and Newpark Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aldel Financial and Newpark Resources
The main advantage of trading using opposite Aldel Financial and Newpark Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aldel Financial position performs unexpectedly, Newpark Resources 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 Newpark Resources will offset losses from the drop in Newpark Resources' long position.| Aldel Financial vs. dMY Squared Technology | Aldel Financial vs. Vine Hill Capital | Aldel Financial vs. DP Cap Acquisition | Aldel Financial vs. PowerUp Acquisition Corp |
| Newpark Resources vs. ProPetro Holding Corp | Newpark Resources vs. RPC Inc | Newpark Resources vs. MRC Global | Newpark Resources vs. Expro Group 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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