Correlation Between Newpark Resources and Parker Hannifin
Can any of the company-specific risk be diversified away by investing in both Newpark Resources and Parker Hannifin 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 Parker Hannifin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Newpark Resources and Parker Hannifin, you can compare the effects of market volatilities on Newpark Resources and Parker Hannifin 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 Parker Hannifin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Newpark Resources and Parker Hannifin.
Diversification Opportunities for Newpark Resources and Parker Hannifin
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Newpark and Parker is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Newpark Resources and Parker Hannifin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Parker Hannifin 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 Parker Hannifin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Parker Hannifin has no effect on the direction of Newpark Resources i.e., Newpark Resources and Parker Hannifin go up and down completely randomly.
Pair Corralation between Newpark Resources and Parker Hannifin
Allowing for the 90-day total investment horizon Newpark Resources is expected to generate 1.5 times more return on investment than Parker Hannifin. However, Newpark Resources is 1.5 times more volatile than Parker Hannifin. It trades about 0.16 of its potential returns per unit of risk. Parker Hannifin is currently generating about 0.17 per unit of risk. If you would invest 692.00 in Newpark Resources on August 28, 2024 and sell it today you would earn a total of 114.00 from holding Newpark Resources or generate 16.47% 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. Parker Hannifin
Performance |
| Timeline |
| Newpark Resources |
| Parker Hannifin |
Newpark Resources and Parker Hannifin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Newpark Resources and Parker Hannifin
The main advantage of trading using opposite Newpark Resources and Parker Hannifin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Newpark Resources position performs unexpectedly, Parker Hannifin 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 Parker Hannifin will offset losses from the drop in Parker Hannifin's long position.| Newpark Resources vs. ProPetro Holding Corp | Newpark Resources vs. RPC Inc | Newpark Resources vs. MRC Global | Newpark Resources vs. Expro Group Holdings |
| Parker Hannifin vs. Illinois Tool Works | Parker Hannifin vs. Pentair PLC | Parker Hannifin vs. Emerson Electric | Parker Hannifin vs. Smith AO |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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