Correlation Between Newpark Resources and Jacobs Solutions
Can any of the company-specific risk be diversified away by investing in both Newpark Resources and Jacobs Solutions 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 Jacobs Solutions into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Newpark Resources and Jacobs Solutions, you can compare the effects of market volatilities on Newpark Resources and Jacobs Solutions 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 Jacobs Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of Newpark Resources and Jacobs Solutions.
Diversification Opportunities for Newpark Resources and Jacobs Solutions
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Newpark and Jacobs is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Newpark Resources and Jacobs Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jacobs Solutions 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 Jacobs Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jacobs Solutions has no effect on the direction of Newpark Resources i.e., Newpark Resources and Jacobs Solutions go up and down completely randomly.
Pair Corralation between Newpark Resources and Jacobs Solutions
Allowing for the 90-day total investment horizon Newpark Resources is expected to generate 1.85 times more return on investment than Jacobs Solutions. However, Newpark Resources is 1.85 times more volatile than Jacobs Solutions. It trades about 0.05 of its potential returns per unit of risk. Jacobs Solutions is currently generating about 0.07 per unit of risk. If you would invest 716.00 in Newpark Resources on September 3, 2024 and sell it today you would earn a total of 120.00 from holding Newpark Resources or generate 16.76% 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. Jacobs Solutions
Performance |
| Timeline |
| Newpark Resources |
| Jacobs Solutions |
Newpark Resources and Jacobs Solutions Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Newpark Resources and Jacobs Solutions
The main advantage of trading using opposite Newpark Resources and Jacobs Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Newpark Resources position performs unexpectedly, Jacobs Solutions 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 Jacobs Solutions will offset losses from the drop in Jacobs Solutions' long position.| Newpark Resources vs. Now Inc | Newpark Resources vs. Enerflex | Newpark Resources vs. Bristow Group | Newpark Resources vs. Forum Energy Technologies |
| Jacobs Solutions vs. KBR Inc | Jacobs Solutions vs. Tetra Tech | Jacobs Solutions vs. Fluor | Jacobs Solutions vs. Topbuild Corp |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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