Correlation Between Newpark Resources and Now
Can any of the company-specific risk be diversified away by investing in both Newpark Resources and Now 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 Now into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Newpark Resources and Now Inc, you can compare the effects of market volatilities on Newpark Resources and Now 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 Now. Check out your portfolio center. Please also check ongoing floating volatility patterns of Newpark Resources and Now.
Diversification Opportunities for Newpark Resources and Now
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Newpark and Now is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Newpark Resources and Now Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Now Inc 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 Now. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Now Inc has no effect on the direction of Newpark Resources i.e., Newpark Resources and Now go up and down completely randomly.
Pair Corralation between Newpark Resources and Now
Allowing for the 90-day total investment horizon Newpark Resources is expected to generate 1.61 times less return on investment than Now. In addition to that, Newpark Resources is 1.2 times more volatile than Now Inc. It trades about 0.01 of its total potential returns per unit of risk. Now Inc is currently generating about 0.02 per unit of volatility. If you would invest 1,437 in Now Inc on August 24, 2024 and sell it today you would earn a total of 34.00 from holding Now Inc or generate 2.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Newpark Resources vs. Now Inc
Performance |
| Timeline |
| Newpark Resources |
| Now Inc |
Newpark Resources and Now Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Newpark Resources and Now
The main advantage of trading using opposite Newpark Resources and Now positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Newpark Resources position performs unexpectedly, Now 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 Now will offset losses from the drop in Now's long position.| Newpark Resources vs. Now Inc | Newpark Resources vs. Enerflex | Newpark Resources vs. Bristow Group | Newpark Resources vs. Forum Energy Technologies |
| Now vs. Oil States International | Now vs. Oceaneering International | Now vs. Geospace Technologies | Now vs. Newpark Resources |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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