Correlation Between Newpark Resources and Enerflex
Can any of the company-specific risk be diversified away by investing in both Newpark Resources and Enerflex 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 Enerflex into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Newpark Resources and Enerflex, you can compare the effects of market volatilities on Newpark Resources and Enerflex 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 Enerflex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Newpark Resources and Enerflex.
Diversification Opportunities for Newpark Resources and Enerflex
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Newpark and Enerflex is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Newpark Resources and Enerflex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enerflex 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 Enerflex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enerflex has no effect on the direction of Newpark Resources i.e., Newpark Resources and Enerflex go up and down completely randomly.
Pair Corralation between Newpark Resources and Enerflex
Allowing for the 90-day total investment horizon Newpark Resources is expected to generate 5.35 times less return on investment than Enerflex. But when comparing it to its historical volatility, Newpark Resources is 1.14 times less risky than Enerflex. It trades about 0.03 of its potential returns per unit of risk. Enerflex is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 420.00 in Enerflex on August 27, 2024 and sell it today you would earn a total of 520.00 from holding Enerflex or generate 123.81% 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. Enerflex
Performance |
| Timeline |
| Newpark Resources |
| Enerflex |
Newpark Resources and Enerflex Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Newpark Resources and Enerflex
The main advantage of trading using opposite Newpark Resources and Enerflex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Newpark Resources position performs unexpectedly, Enerflex 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 Enerflex will offset losses from the drop in Enerflex's long position.| Newpark Resources vs. Now Inc | Newpark Resources vs. Enerflex | Newpark Resources vs. Bristow Group | Newpark Resources vs. Forum Energy Technologies |
| Enerflex vs. Natural Gas Services | Enerflex vs. Archrock | Enerflex vs. Geospace Technologies | Enerflex 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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