Correlation Between Newpark Resources and Kodiak Gas
Can any of the company-specific risk be diversified away by investing in both Newpark Resources and Kodiak Gas 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 Kodiak Gas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Newpark Resources and Kodiak Gas Services,, you can compare the effects of market volatilities on Newpark Resources and Kodiak Gas 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 Kodiak Gas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Newpark Resources and Kodiak Gas.
Diversification Opportunities for Newpark Resources and Kodiak Gas
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Newpark and Kodiak is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Newpark Resources and Kodiak Gas Services, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kodiak Gas Services, 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 Kodiak Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kodiak Gas Services, has no effect on the direction of Newpark Resources i.e., Newpark Resources and Kodiak Gas go up and down completely randomly.
Pair Corralation between Newpark Resources and Kodiak Gas
Allowing for the 90-day total investment horizon Newpark Resources is expected to generate 16.23 times less return on investment than Kodiak Gas. But when comparing it to its historical volatility, Newpark Resources is 20.02 times less risky than Kodiak Gas. It trades about 0.07 of its potential returns per unit of risk. Kodiak Gas Services, is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 0.00 in Kodiak Gas Services, on September 2, 2024 and sell it today you would earn a total of 4,044 from holding Kodiak Gas Services, or generate 9.223372036854776E16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 72.78% |
| Values | Daily Returns |
Newpark Resources vs. Kodiak Gas Services,
Performance |
| Timeline |
| Newpark Resources |
| Kodiak Gas Services, |
Newpark Resources and Kodiak Gas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Newpark Resources and Kodiak Gas
The main advantage of trading using opposite Newpark Resources and Kodiak Gas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Newpark Resources position performs unexpectedly, Kodiak Gas 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 Kodiak Gas will offset losses from the drop in Kodiak Gas' long position.| Newpark Resources vs. Enerflex | Newpark Resources vs. Now Inc | Newpark Resources vs. Bristow Group | Newpark Resources vs. Helix Energy Solutions |
| Kodiak Gas vs. Sonos Inc | Kodiak Gas vs. Universal Display | Kodiak Gas vs. Capital Clean Energy | Kodiak Gas vs. Canlan Ice Sports |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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