Correlation Between Newpark Resources and SEI Investments
Can any of the company-specific risk be diversified away by investing in both Newpark Resources and SEI Investments 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 SEI Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Newpark Resources and SEI Investments, you can compare the effects of market volatilities on Newpark Resources and SEI Investments 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 SEI Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Newpark Resources and SEI Investments.
Diversification Opportunities for Newpark Resources and SEI Investments
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Newpark and SEI is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Newpark Resources and SEI Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEI Investments 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 SEI Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEI Investments has no effect on the direction of Newpark Resources i.e., Newpark Resources and SEI Investments go up and down completely randomly.
Pair Corralation between Newpark Resources and SEI Investments
Allowing for the 90-day total investment horizon Newpark Resources is expected to generate 2.41 times more return on investment than SEI Investments. However, Newpark Resources is 2.41 times more volatile than SEI Investments. It trades about 0.24 of its potential returns per unit of risk. SEI Investments is currently generating about 0.27 per unit of risk. If you would invest 678.00 in Newpark Resources on August 26, 2024 and sell it today you would earn a total of 114.00 from holding Newpark Resources or generate 16.81% 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. SEI Investments
Performance |
| Timeline |
| Newpark Resources |
| SEI Investments |
Newpark Resources and SEI Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Newpark Resources and SEI Investments
The main advantage of trading using opposite Newpark Resources and SEI Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Newpark Resources position performs unexpectedly, SEI Investments 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 SEI Investments will offset losses from the drop in SEI Investments' long position.| Newpark Resources vs. ProPetro Holding Corp | Newpark Resources vs. RPC Inc | Newpark Resources vs. MRC Global | Newpark Resources vs. Oil States International |
| SEI Investments vs. PowerUp Acquisition Corp | SEI Investments vs. Aurora Innovation | SEI Investments vs. HUMANA INC | SEI Investments vs. Aquagold International |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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