Correlation Between Newpark Resources and Denison Mines
Can any of the company-specific risk be diversified away by investing in both Newpark Resources and Denison Mines 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 Denison Mines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Newpark Resources and Denison Mines Corp, you can compare the effects of market volatilities on Newpark Resources and Denison Mines 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 Denison Mines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Newpark Resources and Denison Mines.
Diversification Opportunities for Newpark Resources and Denison Mines
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Newpark and Denison is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Newpark Resources and Denison Mines Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Denison Mines Corp 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 Denison Mines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Denison Mines Corp has no effect on the direction of Newpark Resources i.e., Newpark Resources and Denison Mines go up and down completely randomly.
Pair Corralation between Newpark Resources and Denison Mines
Allowing for the 90-day total investment horizon Newpark Resources is expected to generate 1.13 times less return on investment than Denison Mines. But when comparing it to its historical volatility, Newpark Resources is 1.22 times less risky than Denison Mines. It trades about 0.07 of its potential returns per unit of risk. Denison Mines Corp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 110.00 in Denison Mines Corp on August 28, 2024 and sell it today you would earn a total of 122.00 from holding Denison Mines Corp or generate 110.91% 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. Denison Mines Corp
Performance |
| Timeline |
| Newpark Resources |
| Denison Mines Corp |
Newpark Resources and Denison Mines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Newpark Resources and Denison Mines
The main advantage of trading using opposite Newpark Resources and Denison Mines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Newpark Resources position performs unexpectedly, Denison Mines 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 Denison Mines will offset losses from the drop in Denison Mines' long position.| Newpark Resources vs. ProPetro Holding Corp | Newpark Resources vs. RPC Inc | Newpark Resources vs. MRC Global | Newpark Resources vs. Expro Group Holdings |
| Denison Mines vs. Energy Fuels | Denison Mines vs. enCore Energy Corp | Denison Mines vs. Ur Energy | Denison Mines vs. Cameco 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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