Correlation Between Oil Dri and NewMarket

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

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

Diversification Opportunities for Oil Dri and NewMarket

0.51

Correlation Coefficient

Oil Dri  NewMarket

Very weak diversification

The 3 months correlation between Oil and NewMarket is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Oil Dri and NewMarket in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NewMarket and Oil Dri 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 Oil Dri are associated (or correlated) with NewMarket. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NewMarket has no effect on the direction of Oil Dri i.e., Oil Dri and NewMarket go up and down completely randomly.

Pair Corralation between Oil Dri and NewMarket

Considering the 90-day investment horizon Oil Dri is expected to generate 1.26 times more return on investment than NewMarket. However, Oil Dri is 1.26 times more volatile than NewMarket. It trades about 0.05 of its potential returns per unit of risk. NewMarket is currently generating about 0.06 per unit of risk. If you would invest  4,355  in Oil Dri on December 28, 2024 and sell it today you would earn a total of  258.00  from holding Oil Dri or generate 5.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

Oil Dri  vs.  NewMarket

Oil Dri

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Oil Dri are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting fundamental indicators, Oil Dri may actually be approaching a critical reversion point that can send shares even higher in April 2025.

NewMarket

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in NewMarket are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady technical and fundamental indicators, NewMarket may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Oil Dri and NewMarket

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

The idea behind Oil Dri and NewMarket 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.