Correlation Between Newpark Resources and TechnipFMC PLC
Can any of the company-specific risk be diversified away by investing in both Newpark Resources and TechnipFMC PLC 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 TechnipFMC PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Newpark Resources and TechnipFMC PLC, you can compare the effects of market volatilities on Newpark Resources and TechnipFMC PLC 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 TechnipFMC PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Newpark Resources and TechnipFMC PLC.
Diversification Opportunities for Newpark Resources and TechnipFMC PLC
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Newpark and TechnipFMC is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Newpark Resources and TechnipFMC PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TechnipFMC PLC 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 TechnipFMC PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TechnipFMC PLC has no effect on the direction of Newpark Resources i.e., Newpark Resources and TechnipFMC PLC go up and down completely randomly.
Pair Corralation between Newpark Resources and TechnipFMC PLC
Allowing for the 90-day total investment horizon Newpark Resources is expected to generate 2.7 times less return on investment than TechnipFMC PLC. In addition to that, Newpark Resources is 1.22 times more volatile than TechnipFMC PLC. It trades about 0.03 of its total potential returns per unit of risk. TechnipFMC PLC is currently generating about 0.09 per unit of volatility. If you would invest 2,052 in TechnipFMC PLC on August 27, 2024 and sell it today you would earn a total of 1,031 from holding TechnipFMC PLC or generate 50.24% 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. TechnipFMC PLC
Performance |
| Timeline |
| Newpark Resources |
| TechnipFMC PLC |
Newpark Resources and TechnipFMC PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Newpark Resources and TechnipFMC PLC
The main advantage of trading using opposite Newpark Resources and TechnipFMC PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Newpark Resources position performs unexpectedly, TechnipFMC PLC 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 TechnipFMC PLC will offset losses from the drop in TechnipFMC PLC's long position.| Newpark Resources vs. Now Inc | Newpark Resources vs. Enerflex | Newpark Resources vs. Bristow Group | Newpark Resources vs. Forum Energy Technologies |
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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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