Correlation Between Newpark Resources and Sligro Food
Can any of the company-specific risk be diversified away by investing in both Newpark Resources and Sligro Food 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 Sligro Food into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Newpark Resources and Sligro Food Group, you can compare the effects of market volatilities on Newpark Resources and Sligro Food 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 Sligro Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Newpark Resources and Sligro Food.
Diversification Opportunities for Newpark Resources and Sligro Food
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Newpark and Sligro is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Newpark Resources and Sligro Food Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sligro Food Group 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 Sligro Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sligro Food Group has no effect on the direction of Newpark Resources i.e., Newpark Resources and Sligro Food go up and down completely randomly.
Pair Corralation between Newpark Resources and Sligro Food
Allowing for the 90-day total investment horizon Newpark Resources is expected to generate 1.16 times more return on investment than Sligro Food. However, Newpark Resources is 1.16 times more volatile than Sligro Food Group. It trades about 0.4 of its potential returns per unit of risk. Sligro Food Group is currently generating about -0.21 per unit of risk. If you would invest 657.00 in Newpark Resources on September 5, 2024 and sell it today you would earn a total of 182.00 from holding Newpark Resources or generate 27.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Newpark Resources vs. Sligro Food Group
Performance |
| Timeline |
| Newpark Resources |
| Sligro Food Group |
Newpark Resources and Sligro Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Newpark Resources and Sligro Food
The main advantage of trading using opposite Newpark Resources and Sligro Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Newpark Resources position performs unexpectedly, Sligro Food 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 Sligro Food will offset losses from the drop in Sligro Food's long position.| Newpark Resources vs. Weatherford International PLC | Newpark Resources vs. Enerflex | Newpark Resources vs. RPC Inc | Newpark Resources vs. Cactus Inc |
| Sligro Food vs. Funko Inc | Sligro Food vs. IPG Photonics | Sligro Food vs. Life Time Group | Sligro Food vs. Brunswick |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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