Correlation Between Newpark Resources and Baker Hughes
Can any of the company-specific risk be diversified away by investing in both Newpark Resources and Baker Hughes 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 Baker Hughes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Newpark Resources and Baker Hughes Co, you can compare the effects of market volatilities on Newpark Resources and Baker Hughes 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 Baker Hughes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Newpark Resources and Baker Hughes.
Diversification Opportunities for Newpark Resources and Baker Hughes
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Newpark and Baker is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Newpark Resources and Baker Hughes Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baker Hughes 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 Baker Hughes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baker Hughes has no effect on the direction of Newpark Resources i.e., Newpark Resources and Baker Hughes go up and down completely randomly.
Pair Corralation between Newpark Resources and Baker Hughes
Allowing for the 90-day total investment horizon Newpark Resources is expected to generate 1.5 times more return on investment than Baker Hughes. However, Newpark Resources is 1.5 times more volatile than Baker Hughes Co. It trades about 0.07 of its potential returns per unit of risk. Baker Hughes Co is currently generating about 0.07 per unit of risk. If you would invest 398.00 in Newpark Resources on August 27, 2024 and sell it today you would earn a total of 394.00 from holding Newpark Resources or generate 98.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Newpark Resources vs. Baker Hughes Co
Performance |
| Timeline |
| Newpark Resources |
| Baker Hughes |
Newpark Resources and Baker Hughes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Newpark Resources and Baker Hughes
The main advantage of trading using opposite Newpark Resources and Baker Hughes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Newpark Resources position performs unexpectedly, Baker Hughes 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 Baker Hughes will offset losses from the drop in Baker Hughes' long position.| Newpark Resources vs. Now Inc | Newpark Resources vs. Enerflex | Newpark Resources vs. Bristow Group | Newpark Resources vs. Forum Energy Technologies |
| Baker Hughes vs. Schlumberger NV | Baker Hughes vs. NOV Inc | Baker Hughes vs. Weatherford International PLC | Baker Hughes vs. Tenaris SA ADR |
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 Stocks Directory module to find actively traded stocks across global markets.
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