Correlation Between Newpark Resources and NETGEAR
Can any of the company-specific risk be diversified away by investing in both Newpark Resources and NETGEAR 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 NETGEAR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Newpark Resources and NETGEAR, you can compare the effects of market volatilities on Newpark Resources and NETGEAR 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 NETGEAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Newpark Resources and NETGEAR.
Diversification Opportunities for Newpark Resources and NETGEAR
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Newpark and NETGEAR is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Newpark Resources and NETGEAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NETGEAR 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 NETGEAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NETGEAR has no effect on the direction of Newpark Resources i.e., Newpark Resources and NETGEAR go up and down completely randomly.
Pair Corralation between Newpark Resources and NETGEAR
Allowing for the 90-day total investment horizon Newpark Resources is expected to generate 1.56 times more return on investment than NETGEAR. However, Newpark Resources is 1.56 times more volatile than NETGEAR. It trades about 0.37 of its potential returns per unit of risk. NETGEAR is currently generating about 0.29 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 Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Newpark Resources vs. NETGEAR
Performance |
| Timeline |
| Newpark Resources |
| NETGEAR |
Newpark Resources and NETGEAR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Newpark Resources and NETGEAR
The main advantage of trading using opposite Newpark Resources and NETGEAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Newpark Resources position performs unexpectedly, NETGEAR 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 NETGEAR will offset losses from the drop in NETGEAR's long position.| Newpark Resources vs. Enerflex | Newpark Resources vs. Now Inc | Newpark Resources vs. Bristow Group | Newpark Resources vs. Helix Energy Solutions |
| NETGEAR vs. Comtech Telecommunications Corp | NETGEAR vs. KVH Industries | NETGEAR vs. Silicom | NETGEAR vs. Knowles Cor |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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