Correlation Between Keurig Dr and Newpark Resources
Can any of the company-specific risk be diversified away by investing in both Keurig Dr 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 Keurig Dr and Newpark Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Keurig Dr Pepper and Newpark Resources, you can compare the effects of market volatilities on Keurig Dr 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 Keurig Dr with a short position of Newpark Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Keurig Dr and Newpark Resources.
Diversification Opportunities for Keurig Dr and Newpark Resources
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Keurig and Newpark is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Keurig Dr Pepper and Newpark Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newpark Resources and Keurig Dr 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 Keurig Dr Pepper 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 Keurig Dr i.e., Keurig Dr and Newpark Resources go up and down completely randomly.
Pair Corralation between Keurig Dr and Newpark Resources
Considering the 90-day investment horizon Keurig Dr Pepper is expected to under-perform the Newpark Resources. But the stock apears to be less risky and, when comparing its historical volatility, Keurig Dr Pepper is 2.18 times less risky than Newpark Resources. The stock trades about -0.01 of its potential returns per unit of risk. The Newpark Resources is currently generating about 0.4 of returns per unit of risk over similar time horizon. If you would invest 657.00 in Newpark Resources on September 4, 2024 and sell it today you would earn a total of 182.00 from holding Newpark Resources or generate 27.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Keurig Dr Pepper vs. Newpark Resources
Performance |
| Timeline |
| Keurig Dr Pepper |
| Newpark Resources |
Keurig Dr and Newpark Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Keurig Dr and Newpark Resources
The main advantage of trading using opposite Keurig Dr and Newpark Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Keurig Dr 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.| Keurig Dr vs. Celsius Holdings | Keurig Dr vs. Vita Coco | Keurig Dr vs. PepsiCo | Keurig Dr vs. Coca Cola Femsa SAB |
| 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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