Correlation Between Enservco and Newpark Resources

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

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

Diversification Opportunities for Enservco and Newpark Resources

0.46

Correlation Coefficient

Enservco  Newpark Resources

Very weak diversification

The 3 months correlation between Enservco and Newpark is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Enservco Co and Newpark Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newpark Resources and Enservco 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 Enservco Co are associated (or correlated) with Newpark Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newpark Resources has no effect on the direction of Enservco i.e., Enservco and Newpark Resources go up and down completely randomly.

Pair Corralation between Enservco and Newpark Resources

Given the investment horizon of 90 days Enservco Co is expected to under-perform the Newpark Resources. In addition to that, Enservco is 4.64 times more volatile than Newpark Resources. It trades about -0.09 of its total potential returns per unit of risk. Newpark Resources is currently generating about -0.03 per unit of volatility. If you would invest  747.00  in Newpark Resources on August 21, 2024 and sell it today you would lose (30.00) from holding Newpark Resources or give up 4.02% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	81.4%
Values	Daily Returns

Enservco Co  vs.  Newpark Resources

Enservco

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Enservco Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in December 2024. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Newpark Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Newpark Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unfluctuating performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Enservco and Newpark Resources

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

The idea behind Enservco Co and Newpark Resources 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.