Correlation Between Newpark Resources and Cracker Barrel
Can any of the company-specific risk be diversified away by investing in both Newpark Resources and Cracker Barrel 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 Cracker Barrel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Newpark Resources and Cracker Barrel Old, you can compare the effects of market volatilities on Newpark Resources and Cracker Barrel 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 Cracker Barrel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Newpark Resources and Cracker Barrel.
Diversification Opportunities for Newpark Resources and Cracker Barrel
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Newpark and Cracker is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Newpark Resources and Cracker Barrel Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cracker Barrel Old 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 Cracker Barrel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cracker Barrel Old has no effect on the direction of Newpark Resources i.e., Newpark Resources and Cracker Barrel go up and down completely randomly.
Pair Corralation between Newpark Resources and Cracker Barrel
Allowing for the 90-day total investment horizon Newpark Resources is expected to generate 0.85 times more return on investment than Cracker Barrel. However, Newpark Resources is 1.17 times less risky than Cracker Barrel. It trades about 0.08 of its potential returns per unit of risk. Cracker Barrel Old is currently generating about -0.03 per unit of risk. If you would invest 438.00 in Newpark Resources on August 31, 2024 and sell it today you would earn a total of 398.00 from holding Newpark Resources or generate 90.87% 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. Cracker Barrel Old
Performance |
| Timeline |
| Newpark Resources |
| Cracker Barrel Old |
Newpark Resources and Cracker Barrel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Newpark Resources and Cracker Barrel
The main advantage of trading using opposite Newpark Resources and Cracker Barrel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Newpark Resources position performs unexpectedly, Cracker Barrel 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 Cracker Barrel will offset losses from the drop in Cracker Barrel's long position.| Newpark Resources vs. Now Inc | Newpark Resources vs. Enerflex | Newpark Resources vs. Bristow Group | Newpark Resources vs. Helix Energy Solutions |
| Cracker Barrel vs. Brinker International | Cracker Barrel vs. BJs Restaurants | Cracker Barrel vs. Texas Roadhouse | Cracker Barrel vs. Papa Johns International |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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