Correlation Between Newpark Resources and Exterran Corp
Can any of the company-specific risk be diversified away by investing in both Newpark Resources and Exterran Corp 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 Exterran Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Newpark Resources and Exterran Corp, you can compare the effects of market volatilities on Newpark Resources and Exterran Corp 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 Exterran Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Newpark Resources and Exterran Corp.
Diversification Opportunities for Newpark Resources and Exterran Corp
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Newpark and Exterran is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Newpark Resources and Exterran Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exterran Corp 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 Exterran Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exterran Corp has no effect on the direction of Newpark Resources i.e., Newpark Resources and Exterran Corp go up and down completely randomly.
Pair Corralation between Newpark Resources and Exterran Corp
Allowing for the 90-day total investment horizon Newpark Resources is expected to generate 0.76 times more return on investment than Exterran Corp. However, Newpark Resources is 1.32 times less risky than Exterran Corp. It trades about 0.04 of its potential returns per unit of risk. Exterran Corp is currently generating about -0.06 per unit of risk. If you would invest 474.00 in Newpark Resources on December 29, 2023 and sell it today you would earn a total of 245.00 from holding Newpark Resources or generate 51.69% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 22.47% |
Values | Daily Returns |
Newpark Resources vs. Exterran Corp
Performance |
Timeline |
Newpark Resources |
Exterran Corp |
Risk-Adjusted Performance
0 of 100
Low | High |
Very Weak
Newpark Resources and Exterran Corp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Newpark Resources and Exterran Corp
The main advantage of trading using opposite Newpark Resources and Exterran Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Newpark Resources position performs unexpectedly, Exterran Corp 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 Exterran Corp will offset losses from the drop in Exterran Corp's long position.Newpark Resources vs. NETGEAR | Newpark Resources vs. Amgen Inc | Newpark Resources vs. Iridium Communications | Newpark Resources vs. National CineMedia |
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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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