Correlation Between Newpark Resources and National CineMedia
Can any of the company-specific risk be diversified away by investing in both Newpark Resources and National CineMedia 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 National CineMedia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Newpark Resources and National CineMedia, you can compare the effects of market volatilities on Newpark Resources and National CineMedia 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 National CineMedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Newpark Resources and National CineMedia.
Diversification Opportunities for Newpark Resources and National CineMedia
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Newpark and National is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Newpark Resources and National CineMedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National CineMedia 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 National CineMedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National CineMedia has no effect on the direction of Newpark Resources i.e., Newpark Resources and National CineMedia go up and down completely randomly.
Pair Corralation between Newpark Resources and National CineMedia
Allowing for the 90-day total investment horizon Newpark Resources is expected to generate 1.02 times more return on investment than National CineMedia. However, Newpark Resources is 1.02 times more volatile than National CineMedia. It trades about 0.33 of its potential returns per unit of risk. National CineMedia is currently generating about -0.06 per unit of risk. If you would invest 673.00 in Newpark Resources on August 31, 2024 and sell it today you would earn a total of 156.00 from holding Newpark Resources or generate 23.18% 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. National CineMedia
Performance |
| Timeline |
| Newpark Resources |
| National CineMedia |
Newpark Resources and National CineMedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Newpark Resources and National CineMedia
The main advantage of trading using opposite Newpark Resources and National CineMedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Newpark Resources position performs unexpectedly, National CineMedia 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 National CineMedia will offset losses from the drop in National CineMedia's long position.| Newpark Resources vs. Now Inc | Newpark Resources vs. Enerflex | Newpark Resources vs. Bristow Group | Newpark Resources vs. Helix Energy Solutions |
| National CineMedia vs. MGO Global Common | National CineMedia vs. Baosheng Media Group | National CineMedia vs. Impact Fusion International | National CineMedia vs. ZW Data Action |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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