Correlation Between Newpark Resources and National Energy
Can any of the company-specific risk be diversified away by investing in both Newpark Resources and National Energy 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 Energy 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 Energy Services, you can compare the effects of market volatilities on Newpark Resources and National Energy 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 Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Newpark Resources and National Energy.
Diversification Opportunities for Newpark Resources and National Energy
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Newpark and National is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Newpark Resources and National Energy Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Energy 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 National Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Energy Services has no effect on the direction of Newpark Resources i.e., Newpark Resources and National Energy go up and down completely randomly.
Pair Corralation between Newpark Resources and National Energy
Allowing for the 90-day total investment horizon Newpark Resources is expected to generate 0.95 times more return on investment than National Energy. However, Newpark Resources is 1.05 times less risky than National Energy. It trades about 0.02 of its potential returns per unit of risk. National Energy Services is currently generating about -0.01 per unit of risk. If you would invest 810.00 in Newpark Resources on September 2, 2024 and sell it today you would earn a total of 26.00 from holding Newpark Resources or generate 3.21% 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 Energy Services
Performance |
| Timeline |
| Newpark Resources |
| National Energy Services |
Newpark Resources and National Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Newpark Resources and National Energy
The main advantage of trading using opposite Newpark Resources and National Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Newpark Resources position performs unexpectedly, National Energy 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 Energy will offset losses from the drop in National Energy's long position.| Newpark Resources vs. Enerflex | Newpark Resources vs. Now Inc | Newpark Resources vs. Bristow Group | Newpark Resources vs. Helix Energy Solutions |
| National Energy vs. Dawson Geophysical | National Energy vs. Mccoy Global | National Energy vs. Ranger Energy Services | National Energy vs. MRC Global |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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