Correlation Between OFFICE DEPOT and Newtek Business

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

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

Diversification Opportunities for OFFICE DEPOT and Newtek Business

0.0

Correlation Coefficient

OFFICE DEPOT  Newtek Business

Pay attention - limited upside

The 3 months correlation between OFFICE and Newtek is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding OFFICE DEPOT 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 OFFICE DEPOT 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 OFFICE DEPOT 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 OFFICE DEPOT i.e., OFFICE DEPOT and Newtek Business go up and down completely randomly.

Pair Corralation between OFFICE DEPOT and Newtek Business

If you would invest  1,191  in Newtek Business Services on October 24, 2024 and sell it today you would earn a total of  60.00  from holding Newtek Business Services or generate 5.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

OFFICE DEPOT  vs.  Newtek Business Services

OFFICE DEPOT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days OFFICE DEPOT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, OFFICE DEPOT is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Newtek Business Services

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Newtek Business Services are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Newtek Business may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with OFFICE DEPOT and Newtek Business

The main advantage of trading using opposite OFFICE DEPOT and Newtek Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OFFICE DEPOT 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 OFFICE DEPOT 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.

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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.