Correlation Between Newpark Resources and Brunswick
Can any of the company-specific risk be diversified away by investing in both Newpark Resources and Brunswick 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 Brunswick into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Newpark Resources and Brunswick, you can compare the effects of market volatilities on Newpark Resources and Brunswick 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 Brunswick. Check out your portfolio center. Please also check ongoing floating volatility patterns of Newpark Resources and Brunswick.
Diversification Opportunities for Newpark Resources and Brunswick
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Newpark and Brunswick is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Newpark Resources and Brunswick in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brunswick 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 Brunswick. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brunswick has no effect on the direction of Newpark Resources i.e., Newpark Resources and Brunswick go up and down completely randomly.
Pair Corralation between Newpark Resources and Brunswick
Allowing for the 90-day total investment horizon Newpark Resources is expected to generate 1.13 times more return on investment than Brunswick. However, Newpark Resources is 1.13 times more volatile than Brunswick. It trades about -0.01 of its potential returns per unit of risk. Brunswick is currently generating about -0.29 per unit of risk. If you would invest 735.00 in Newpark Resources on January 24, 2024 and sell it today you would lose (5.00) from holding Newpark Resources or give up 0.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Newpark Resources vs. Brunswick
Performance |
| Timeline |
| Newpark Resources |
| Brunswick |
Newpark Resources and Brunswick Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Newpark Resources and Brunswick
The main advantage of trading using opposite Newpark Resources and Brunswick positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Newpark Resources position performs unexpectedly, Brunswick 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 Brunswick will offset losses from the drop in Brunswick's long position.| Newpark Resources vs. Expro Group Holdings | 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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