Correlation Between Newport Exploration and Western Resources

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

By analyzing existing cross correlation between Newport Exploration and Western Resources Corp, you can compare the effects of market volatilities on Newport Exploration and Western 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 Newport Exploration with a short position of Western Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Newport Exploration and Western Resources.

Diversification Opportunities for Newport Exploration and Western Resources

0.0

Correlation Coefficient

Newport Exploration  Western Resources

Pay attention - limited upside

The 3 months correlation between Newport and Western is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Newport Exploration and Western Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Resources Corp and Newport Exploration 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 Newport Exploration are associated (or correlated) with Western Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Resources Corp has no effect on the direction of Newport Exploration i.e., Newport Exploration and Western Resources go up and down completely randomly.

Pair Corralation between Newport Exploration and Western Resources

If you would invest  4.70  in Newport Exploration on December 3, 2024 and sell it today you would earn a total of  0.90  from holding Newport Exploration or generate 19.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Newport Exploration  vs.  Western Resources Corp

Newport Exploration

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Newport Exploration are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Newport Exploration reported solid returns over the last few months and may actually be approaching a breakup point.

Western Resources Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Western Resources Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak 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.

Pair Trading with Newport Exploration and Western Resources

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

The idea behind Newport Exploration and Western Resources Corp 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.