Correlation Between ARDAGH METAL and Newtek Business

Can any of the company-specific risk be diversified away by investing in both ARDAGH METAL and Newtek Business 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 ARDAGH METAL and Newtek Business into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ARDAGH METAL PACDL 0001 and Newtek Business Services, you can compare the effects of market volatilities on ARDAGH METAL and Newtek Business 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 ARDAGH METAL with a short position of Newtek Business. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARDAGH METAL and Newtek Business.

Diversification Opportunities for ARDAGH METAL and Newtek Business

0.14

Correlation Coefficient

ARDAGH METAL  Newtek Business

Average diversification

The 3 months correlation between ARDAGH and Newtek is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding ARDAGH METAL PACDL 0001 and Newtek Business Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newtek Business Services and ARDAGH METAL 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 ARDAGH METAL PACDL 0001 are associated (or correlated) with Newtek Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newtek Business Services has no effect on the direction of ARDAGH METAL i.e., ARDAGH METAL and Newtek Business go up and down completely randomly.

Pair Corralation between ARDAGH METAL and Newtek Business

Assuming the 90 days horizon ARDAGH METAL PACDL 0001 is expected to under-perform the Newtek Business. In addition to that, ARDAGH METAL is 1.22 times more volatile than Newtek Business Services. It trades about -0.04 of its total potential returns per unit of risk. Newtek Business Services is currently generating about 0.1 per unit of volatility. If you would invest  1,077  in Newtek Business Services on October 2, 2024 and sell it today you would earn a total of  194.00  from holding Newtek Business Services or generate 18.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

ARDAGH METAL PACDL 0001  vs.  Newtek Business Services

ARDAGH METAL PACDL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ARDAGH METAL PACDL 0001 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Newtek Business Services

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Newtek Business Services are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Newtek Business reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ARDAGH METAL and Newtek Business

The main advantage of trading using opposite ARDAGH METAL and Newtek Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ARDAGH METAL position performs unexpectedly, Newtek Business 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 Newtek Business will offset losses from the drop in Newtek Business' long position.

The idea behind ARDAGH METAL PACDL 0001 and Newtek Business Services pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.