Correlation Between Newpark Resources and Halliburton
Can any of the company-specific risk be diversified away by investing in both Newpark Resources and Halliburton 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 Halliburton into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Newpark Resources and Halliburton, you can compare the effects of market volatilities on Newpark Resources and Halliburton 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 Halliburton. Check out your portfolio center. Please also check ongoing floating volatility patterns of Newpark Resources and Halliburton.
Diversification Opportunities for Newpark Resources and Halliburton
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Newpark and Halliburton is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Newpark Resources and Halliburton in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Halliburton 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 Halliburton. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Halliburton has no effect on the direction of Newpark Resources i.e., Newpark Resources and Halliburton go up and down completely randomly.
Pair Corralation between Newpark Resources and Halliburton
Allowing for the 90-day total investment horizon Newpark Resources is expected to generate 1.51 times more return on investment than Halliburton. However, Newpark Resources is 1.51 times more volatile than Halliburton. It trades about 0.24 of its potential returns per unit of risk. Halliburton is currently generating about 0.28 per unit of risk. If you would invest 678.00 in Newpark Resources on August 26, 2024 and sell it today you would earn a total of 114.00 from holding Newpark Resources or generate 16.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Newpark Resources vs. Halliburton
Performance |
| Timeline |
| Newpark Resources |
| Halliburton |
Newpark Resources and Halliburton Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Newpark Resources and Halliburton
The main advantage of trading using opposite Newpark Resources and Halliburton positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Newpark Resources position performs unexpectedly, Halliburton 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 Halliburton will offset losses from the drop in Halliburton's long position.| Newpark Resources vs. Now Inc | Newpark Resources vs. Enerflex | Newpark Resources vs. Bristow Group | Newpark Resources vs. Forum Energy Technologies |
| Halliburton vs. Baker Hughes Co | Halliburton vs. NOV Inc | Halliburton vs. Tenaris SA ADR | Halliburton vs. Weatherford International PLC |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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