Correlation Between Fiserv and Newpark Resources
Can any of the company-specific risk be diversified away by investing in both Fiserv 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 Fiserv and Newpark Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fiserv Inc and Newpark Resources, you can compare the effects of market volatilities on Fiserv 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 Fiserv with a short position of Newpark Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fiserv and Newpark Resources.
Diversification Opportunities for Fiserv and Newpark Resources
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fiserv and Newpark is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Fiserv Inc and Newpark Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newpark Resources and Fiserv 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 Fiserv Inc 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 Fiserv i.e., Fiserv and Newpark Resources go up and down completely randomly.
Pair Corralation between Fiserv and Newpark Resources
Allowing for the 90-day total investment horizon Fiserv Inc is expected to under-perform the Newpark Resources. But the stock apears to be less risky and, when comparing its historical volatility, Fiserv Inc is 1.1 times less risky than Newpark Resources. The stock trades about -0.13 of its potential returns per unit of risk. The Newpark Resources is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 716.00 in Newpark Resources on January 26, 2024 and sell it today you would earn a total of 10.00 from holding Newpark Resources or generate 1.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fiserv Inc vs. Newpark Resources
Performance |
| Timeline |
| Fiserv Inc |
| Newpark Resources |
Fiserv and Newpark Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fiserv and Newpark Resources
The main advantage of trading using opposite Fiserv and Newpark Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fiserv 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.| Fiserv vs. CACI International | Fiserv vs. CDW Corp | Fiserv vs. Jack Henry Associates | Fiserv vs. Broadridge Financial Solutions |
| Newpark Resources vs. Expro Group Holdings | Newpark Resources vs. Ranger Energy Services | Newpark Resources vs. MRC Global | Newpark Resources vs. Now Inc |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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