Correlation Between Tidewater and Newpark Resources
Can any of the company-specific risk be diversified away by investing in both Tidewater 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 Tidewater and Newpark Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tidewater and Newpark Resources, you can compare the effects of market volatilities on Tidewater 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 Tidewater with a short position of Newpark Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tidewater and Newpark Resources.
Diversification Opportunities for Tidewater and Newpark Resources
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Tidewater and Newpark is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Tidewater and Newpark Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newpark Resources and Tidewater 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 Tidewater 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 Tidewater i.e., Tidewater and Newpark Resources go up and down completely randomly.
Pair Corralation between Tidewater and Newpark Resources
Considering the 90-day investment horizon Tidewater is expected to generate 1.57 times less return on investment than Newpark Resources. In addition to that, Tidewater is 1.17 times more volatile than Newpark Resources. It trades about 0.04 of its total potential returns per unit of risk. Newpark Resources is currently generating about 0.07 per unit of volatility. If you would invest 391.00 in Newpark Resources on September 13, 2024 and sell it today you would earn a total of 403.00 from holding Newpark Resources or generate 103.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tidewater vs. Newpark Resources
Performance |
| Timeline |
| Tidewater |
| Newpark Resources |
Tidewater and Newpark Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tidewater and Newpark Resources
The main advantage of trading using opposite Tidewater and Newpark Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tidewater 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.| Tidewater vs. Newpark Resources | Tidewater vs. Tenaris SA ADR | Tidewater vs. Dawson Geophysical | Tidewater vs. Bristow Group |
| 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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