Correlation Between Newpark Resources and Geospace Technologies
Can any of the company-specific risk be diversified away by investing in both Newpark Resources and Geospace Technologies 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 Geospace Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Newpark Resources and Geospace Technologies, you can compare the effects of market volatilities on Newpark Resources and Geospace Technologies 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 Geospace Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Newpark Resources and Geospace Technologies.
Diversification Opportunities for Newpark Resources and Geospace Technologies
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Newpark and Geospace is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Newpark Resources and Geospace Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Geospace Technologies 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 Geospace Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Geospace Technologies has no effect on the direction of Newpark Resources i.e., Newpark Resources and Geospace Technologies go up and down completely randomly.
Pair Corralation between Newpark Resources and Geospace Technologies
Allowing for the 90-day total investment horizon Newpark Resources is expected to generate 1.77 times less return on investment than Geospace Technologies. But when comparing it to its historical volatility, Newpark Resources is 1.32 times less risky than Geospace Technologies. It trades about 0.06 of its potential returns per unit of risk. Geospace Technologies is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 440.00 in Geospace Technologies on August 23, 2024 and sell it today you would earn a total of 922.00 from holding Geospace Technologies or generate 209.55% 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. Geospace Technologies
Performance |
| Timeline |
| Newpark Resources |
| Geospace Technologies |
Newpark Resources and Geospace Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Newpark Resources and Geospace Technologies
The main advantage of trading using opposite Newpark Resources and Geospace Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Newpark Resources position performs unexpectedly, Geospace Technologies 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 Geospace Technologies will offset losses from the drop in Geospace Technologies' long position.| Newpark Resources vs. Now Inc | Newpark Resources vs. Enerflex | Newpark Resources vs. Bristow Group | Newpark Resources vs. Forum Energy Technologies |
| Geospace Technologies vs. Enerflex | Geospace Technologies vs. Oil States International | Geospace Technologies vs. Newpark Resources | Geospace Technologies vs. MRC Global |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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