Correlation Between Newpark Resources and EnCore Energy
Can any of the company-specific risk be diversified away by investing in both Newpark Resources and EnCore Energy 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 EnCore Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Newpark Resources and enCore Energy Corp, you can compare the effects of market volatilities on Newpark Resources and EnCore Energy 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 EnCore Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Newpark Resources and EnCore Energy.
Diversification Opportunities for Newpark Resources and EnCore Energy
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Newpark and EnCore is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Newpark Resources and enCore Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on enCore Energy 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 EnCore Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of enCore Energy Corp has no effect on the direction of Newpark Resources i.e., Newpark Resources and EnCore Energy go up and down completely randomly.
Pair Corralation between Newpark Resources and EnCore Energy
Allowing for the 90-day total investment horizon Newpark Resources is expected to generate 0.8 times more return on investment than EnCore Energy. However, Newpark Resources is 1.25 times less risky than EnCore Energy. It trades about 0.07 of its potential returns per unit of risk. enCore Energy Corp is currently generating about 0.05 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 | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Newpark Resources vs. enCore Energy Corp
Performance |
| Timeline |
| Newpark Resources |
| enCore Energy Corp |
Newpark Resources and EnCore Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Newpark Resources and EnCore Energy
The main advantage of trading using opposite Newpark Resources and EnCore Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Newpark Resources position performs unexpectedly, EnCore Energy 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 EnCore Energy will offset losses from the drop in EnCore Energy's long position.| Newpark Resources vs. ProPetro Holding Corp | Newpark Resources vs. RPC Inc | Newpark Resources vs. MRC Global | Newpark Resources vs. Expro Group Holdings |
| EnCore Energy vs. Cameco Corp | EnCore Energy vs. Denison Mines Corp | EnCore Energy vs. Centrus Energy | EnCore Energy vs. NexGen Energy |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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