Correlation Between Scandinavian Tobacco and Newpark Resources
Can any of the company-specific risk be diversified away by investing in both Scandinavian Tobacco 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 Scandinavian Tobacco and Newpark Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Scandinavian Tobacco Group and Newpark Resources, you can compare the effects of market volatilities on Scandinavian Tobacco 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 Scandinavian Tobacco with a short position of Newpark Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scandinavian Tobacco and Newpark Resources.
Diversification Opportunities for Scandinavian Tobacco and Newpark Resources
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Scandinavian and Newpark is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Scandinavian Tobacco Group and Newpark Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newpark Resources and Scandinavian Tobacco 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 Scandinavian Tobacco Group 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 Scandinavian Tobacco i.e., Scandinavian Tobacco and Newpark Resources go up and down completely randomly.
Pair Corralation between Scandinavian Tobacco and Newpark Resources
Assuming the 90 days horizon Scandinavian Tobacco Group is expected to under-perform the Newpark Resources. But the pink sheet apears to be less risky and, when comparing its historical volatility, Scandinavian Tobacco Group is 2.47 times less risky than Newpark Resources. The pink sheet trades about -0.29 of its potential returns per unit of risk. The Newpark Resources is currently generating about 0.4 of returns per unit of risk over similar time horizon. If you would invest 657.00 in Newpark Resources on September 4, 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 | 100.0% |
| Values | Daily Returns |
Scandinavian Tobacco Group vs. Newpark Resources
Performance |
| Timeline |
| Scandinavian Tobacco |
| Newpark Resources |
Scandinavian Tobacco and Newpark Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scandinavian Tobacco and Newpark Resources
The main advantage of trading using opposite Scandinavian Tobacco and Newpark Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scandinavian Tobacco 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.| Scandinavian Tobacco vs. Universal | Scandinavian Tobacco vs. Imperial Brands PLC | Scandinavian Tobacco vs. Japan Tobacco ADR | Scandinavian Tobacco vs. Philip Morris International |
| Newpark Resources vs. Now Inc | Newpark Resources vs. Enerflex | Newpark Resources vs. Bristow Group | Newpark Resources vs. Forum Energy Technologies |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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