Correlation Between Newpark Resources and Expro Group

Can any of the company-specific risk be diversified away by investing in both Newpark Resources and Expro Group 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 Expro Group into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Newpark Resources and Expro Group Holdings, you can compare the effects of market volatilities on Newpark Resources and Expro Group 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 Expro Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Newpark Resources and Expro Group.

Diversification Opportunities for Newpark Resources and Expro Group

0.24

Correlation Coefficient

Newpark Resources  Expro Group

Modest diversification

The 3 months correlation between Newpark and Expro is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Newpark Resources and Expro Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Expro Group Holdings 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 Expro Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Expro Group Holdings has no effect on the direction of Newpark Resources i.e., Newpark Resources and Expro Group go up and down completely randomly.

Pair Corralation between Newpark Resources and Expro Group

Allowing for the 90-day total investment horizon Newpark Resources is expected to generate 0.82 times more return on investment than Expro Group. However, Newpark Resources is 1.22 times less risky than Expro Group. It trades about 0.05 of its potential returns per unit of risk. Expro Group Holdings is currently generating about -0.14 per unit of risk. If you would invest  791.00  in Newpark Resources on September 3, 2024 and sell it today you would earn a total of  48.00  from holding Newpark Resources or generate 6.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Newpark Resources  vs.  Expro Group Holdings

Newpark Resources

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Newpark Resources are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal basic indicators, Newpark Resources may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Expro Group Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Expro Group Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Newpark Resources and Expro Group

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

The idea behind Newpark Resources and Expro Group Holdings 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.