Correlation Between Newpark Resources and Pinterest
Can any of the company-specific risk be diversified away by investing in both Newpark Resources and Pinterest 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 Pinterest into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Newpark Resources and Pinterest, you can compare the effects of market volatilities on Newpark Resources and Pinterest 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 Pinterest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Newpark Resources and Pinterest.
Diversification Opportunities for Newpark Resources and Pinterest
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Newpark and Pinterest is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Newpark Resources and Pinterest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pinterest 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 Pinterest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pinterest has no effect on the direction of Newpark Resources i.e., Newpark Resources and Pinterest go up and down completely randomly.
Pair Corralation between Newpark Resources and Pinterest
Allowing for the 90-day total investment horizon Newpark Resources is expected to generate 0.84 times more return on investment than Pinterest. However, Newpark Resources is 1.19 times less risky than Pinterest. It trades about 0.28 of its potential returns per unit of risk. Pinterest is currently generating about -0.03 per unit of risk. If you would invest 681.00 in Newpark Resources on August 28, 2024 and sell it today you would earn a total of 136.00 from holding Newpark Resources or generate 19.97% 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. Pinterest
Performance |
| Timeline |
| Newpark Resources |
Newpark Resources and Pinterest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Newpark Resources and Pinterest
The main advantage of trading using opposite Newpark Resources and Pinterest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Newpark Resources position performs unexpectedly, Pinterest 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 Pinterest will offset losses from the drop in Pinterest'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 |
| Pinterest vs. Alphabet Inc Class C | Pinterest vs. Twilio Inc | Pinterest vs. Snap Inc | Pinterest vs. Baidu Inc |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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