Correlation Between Anheuser Busch and Newpark Resources
Can any of the company-specific risk be diversified away by investing in both Anheuser Busch 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 Anheuser Busch and Newpark Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Anheuser Busch Inbev and Newpark Resources, you can compare the effects of market volatilities on Anheuser Busch 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 Anheuser Busch with a short position of Newpark Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anheuser Busch and Newpark Resources.
Diversification Opportunities for Anheuser Busch and Newpark Resources
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Anheuser and Newpark is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Anheuser Busch Inbev and Newpark Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newpark Resources and Anheuser Busch 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 Anheuser Busch Inbev 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 Anheuser Busch i.e., Anheuser Busch and Newpark Resources go up and down completely randomly.
Pair Corralation between Anheuser Busch and Newpark Resources
Considering the 90-day investment horizon Anheuser Busch Inbev is expected to under-perform the Newpark Resources. But the stock apears to be less risky and, when comparing its historical volatility, Anheuser Busch Inbev is 2.0 times less risky than Newpark Resources. The stock trades about -0.26 of its potential returns per unit of risk. The Newpark Resources is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 707.00 in Newpark Resources on September 12, 2024 and sell it today you would earn a total of 106.50 from holding Newpark Resources or generate 15.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Anheuser Busch Inbev vs. Newpark Resources
Performance |
| Timeline |
| Anheuser Busch Inbev |
| Newpark Resources |
Anheuser Busch and Newpark Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Anheuser Busch and Newpark Resources
The main advantage of trading using opposite Anheuser Busch and Newpark Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Anheuser Busch 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.| Anheuser Busch vs. Boston Beer | Anheuser Busch vs. Molson Coors Beverage | Anheuser Busch vs. Heineken NV | Anheuser Busch vs. Ambev SA ADR |
| Newpark Resources vs. Now Inc | Newpark Resources vs. Enerflex | Newpark Resources vs. Bristow Group | Newpark Resources vs. Forum Energy Technologies |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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