Correlation Between Newpark Resources and Inter Parfums
Can any of the company-specific risk be diversified away by investing in both Newpark Resources and Inter Parfums 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 Inter Parfums into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Newpark Resources and Inter Parfums, you can compare the effects of market volatilities on Newpark Resources and Inter Parfums 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 Inter Parfums. Check out your portfolio center. Please also check ongoing floating volatility patterns of Newpark Resources and Inter Parfums.
Diversification Opportunities for Newpark Resources and Inter Parfums
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Newpark and Inter is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Newpark Resources and Inter Parfums in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inter Parfums 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 Inter Parfums. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inter Parfums has no effect on the direction of Newpark Resources i.e., Newpark Resources and Inter Parfums go up and down completely randomly.
Pair Corralation between Newpark Resources and Inter Parfums
Allowing for the 90-day total investment horizon Newpark Resources is expected to generate 1.63 times more return on investment than Inter Parfums. However, Newpark Resources is 1.63 times more volatile than Inter Parfums. It trades about 0.41 of its potential returns per unit of risk. Inter Parfums is currently generating about 0.29 per unit of risk. If you would invest 657.00 in Newpark Resources on September 3, 2024 and sell it today you would earn a total of 179.00 from holding Newpark Resources or generate 27.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Newpark Resources vs. Inter Parfums
Performance |
| Timeline |
| Newpark Resources |
| Inter Parfums |
Newpark Resources and Inter Parfums Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Newpark Resources and Inter Parfums
The main advantage of trading using opposite Newpark Resources and Inter Parfums positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Newpark Resources position performs unexpectedly, Inter Parfums 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 Inter Parfums will offset losses from the drop in Inter Parfums' long position.| Newpark Resources vs. Now Inc | Newpark Resources vs. Enerflex | Newpark Resources vs. Bristow Group | Newpark Resources vs. Forum Energy Technologies |
| Inter Parfums vs. Highway Holdings Limited | Inter Parfums vs. QCR Holdings | Inter Parfums vs. Partner Communications | Inter Parfums vs. Acumen Pharmaceuticals |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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