Correlation Between Newpark Resources and FiscalNote Holdings

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Can any of the company-specific risk be diversified away by investing in both Newpark Resources and FiscalNote Holdings 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 FiscalNote Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Newpark Resources and FiscalNote Holdings, you can compare the effects of market volatilities on Newpark Resources and FiscalNote Holdings 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 FiscalNote Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Newpark Resources and FiscalNote Holdings.

Diversification Opportunities for Newpark Resources and FiscalNote Holdings

-0.03
  Correlation Coefficient

Good diversification

The 3 months correlation between Newpark and FiscalNote is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Newpark Resources and FiscalNote Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FiscalNote Holdings 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 FiscalNote Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FiscalNote Holdings has no effect on the direction of Newpark Resources i.e., Newpark Resources and FiscalNote Holdings go up and down completely randomly.

Pair Corralation between Newpark Resources and FiscalNote Holdings

Allowing for the 90-day total investment horizon Newpark Resources is expected to generate 0.59 times more return on investment than FiscalNote Holdings. However, Newpark Resources is 1.69 times less risky than FiscalNote Holdings. It trades about 0.37 of its potential returns per unit of risk. FiscalNote Holdings is currently generating about -0.02 per unit of risk. If you would invest  666.00  in Newpark Resources on September 1, 2024 and sell it today you would earn a total of  170.00  from holding Newpark Resources or generate 25.53% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Newpark Resources  vs.  FiscalNote Holdings

 Performance 
       Timeline  
Newpark Resources 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Newpark Resources are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, Newpark Resources may actually be approaching a critical reversion point that can send shares even higher in December 2024.
FiscalNote Holdings 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days FiscalNote Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in December 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Newpark Resources and FiscalNote Holdings Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Newpark Resources and FiscalNote Holdings

The main advantage of trading using opposite Newpark Resources and FiscalNote Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Newpark Resources position performs unexpectedly, FiscalNote Holdings 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 FiscalNote Holdings will offset losses from the drop in FiscalNote Holdings' long position.
The idea behind Newpark Resources and FiscalNote Holdings pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.

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