Correlation Between ProPetro Holding and Newpark Resources
Can any of the company-specific risk be diversified away by investing in both ProPetro Holding and Newpark Resources 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 ProPetro Holding and Newpark Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ProPetro Holding Corp and Newpark Resources, you can compare the effects of market volatilities on ProPetro Holding and Newpark Resources 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 ProPetro Holding with a short position of Newpark Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProPetro Holding and Newpark Resources.
Diversification Opportunities for ProPetro Holding and Newpark Resources
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ProPetro and Newpark is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding ProPetro Holding Corp and Newpark Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newpark Resources and ProPetro Holding 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 ProPetro Holding Corp are associated (or correlated) with Newpark Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newpark Resources has no effect on the direction of ProPetro Holding i.e., ProPetro Holding and Newpark Resources go up and down completely randomly.
Pair Corralation between ProPetro Holding and Newpark Resources
Given the investment horizon of 90 days ProPetro Holding is expected to generate 1.19 times less return on investment than Newpark Resources. In addition to that, ProPetro Holding is 1.6 times more volatile than Newpark Resources. It trades about 0.13 of its total potential returns per unit of risk. Newpark Resources is currently generating about 0.24 per unit of volatility. If you would invest 681.00 in Newpark Resources on August 27, 2024 and sell it today you would earn a total of 111.00 from holding Newpark Resources or generate 16.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProPetro Holding Corp vs. Newpark Resources
Performance |
| Timeline |
| ProPetro Holding Corp |
| Newpark Resources |
ProPetro Holding and Newpark Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProPetro Holding and Newpark Resources
The main advantage of trading using opposite ProPetro Holding and Newpark Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProPetro Holding position performs unexpectedly, Newpark Resources 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 Newpark Resources will offset losses from the drop in Newpark Resources' long position.| ProPetro Holding vs. Ranger Energy Services | ProPetro Holding vs. Newpark Resources | ProPetro Holding vs. RPC Inc | ProPetro Holding vs. Archrock |
| Newpark Resources vs. ProPetro Holding Corp | Newpark Resources vs. RPC Inc | Newpark Resources vs. MRC Global | Newpark Resources vs. Expro Group Holdings |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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