Correlation Between Newpark Resources and African Agriculture
Can any of the company-specific risk be diversified away by investing in both Newpark Resources and African Agriculture 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 Newpark Resources and African Agriculture into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Newpark Resources and African Agriculture Holdings, you can compare the effects of market volatilities on Newpark Resources and African Agriculture 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 Newpark Resources with a short position of African Agriculture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Newpark Resources and African Agriculture.
Diversification Opportunities for Newpark Resources and African Agriculture
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Newpark and African is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Newpark Resources and African Agriculture Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on African Agriculture and Newpark Resources 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 Newpark Resources are associated (or correlated) with African Agriculture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of African Agriculture has no effect on the direction of Newpark Resources i.e., Newpark Resources and African Agriculture go up and down completely randomly.
Pair Corralation between Newpark Resources and African Agriculture
If you would invest 728.00 in Newpark Resources on September 14, 2024 and sell it today you would earn a total of 82.00 from holding Newpark Resources or generate 11.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 4.76% |
| Values | Daily Returns |
Newpark Resources vs. African Agriculture Holdings
Performance |
| Timeline |
| Newpark Resources |
| African Agriculture |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Newpark Resources and African Agriculture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Newpark Resources and African Agriculture
The main advantage of trading using opposite Newpark Resources and African Agriculture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Newpark Resources position performs unexpectedly, African Agriculture 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 African Agriculture will offset losses from the drop in African Agriculture's long position.| Newpark Resources vs. Tenaris SA ADR | Newpark Resources vs. Dawson Geophysical | Newpark Resources vs. Bristow Group | Newpark Resources vs. Enerflex |
| African Agriculture vs. Emerson Electric | African Agriculture vs. Delta Air Lines | African Agriculture vs. Newpark Resources | African Agriculture vs. JetBlue Airways Corp |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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