Don't consider buying NRP now, it is risky at the moment
17 Dec, 201813 min read
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NRP was among the worst performers today. On a longer term basis, investors in NATURAL RESOURCE PARTNERS LP made -0.03% per day. Monday's performance of -0.92% was a significant underperformance compared to it's daily average.
NRP showed a strong up trend over the last 3 months. During this period NRP returned +29.37% and saw a maximum drawdown of -11.29%. There was a long signal during this period which returned +19.49%.
NRP has been outperforming the SP500 index in recent time. Over the last 2 years 11 months and 10 days, NRP outperformed the SP500 index on 49% days. Which indicates that on days NRP outperforms the SP500 index, it's performance is marginally better than on the days it underperforms the SP500 index.
During the last three months NRP was mostly profitable and delivered on average +0.44% per day. It's best return during this period (of +8.82%) was on Monday, 19 Nov, 2018. While it's worst loss in the same period (of -4.97%) was on Wednesday, 24 Oct, 2018. There was initially a bearish trend during this period which started on 16 Oct, 2018 and went on till 19 Oct, 2018. The trend delivered -3.46% losses to investors. This was followed by a bullish trend that started on 29 Nov, 2018 and ended on 7 Dec, 2018. This bullish trend delivered +4.24% to investors.
NRP had 8 profitable and 4 loss making months over the last year. During the last year, number of profitable months of NRP and SP500 index were the same. NRP significantly outperformed SP500 index in Apr 2018, when it returned +16.58% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. NRP had a shorter streak of profitable months than SP500 index. It only went up in 4 straight months during the last year. It is interesting to note that both NRP and SP500 index significantly outperform during months when quarterly/annual results are announced.
Annual income twenty pounds, annual expenditure nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pound ought and six, result misery.
-- Charles Dickens
NRP is becoming less volatile overall. In comparison, the SP500 index is seeing a rise in volatility. During the last three months, there was a significant fall in NRP's volatility from 19 Nov, 2018 to 14 Dec, 2018. While there was a significant surge in the SP500 index's volatility from 19 Sep, 2018 to 29 Oct, 2018.
Advanced/professional short-term investors should note that NRP has significant negative skewness in it's return distribution. This indicates that NRP is very risky for short-term investment and can significantly underperform for long durations.
SP500 index has more chance of extreme outcomes than NRP. Therefore, SP500 must receive a lower allocation than NRP in your portfolio. SP500 index usually has shorter drawdown period than NRP.
Based on your interest in NRP you may find it interesting to know that PTC and ZBRA are both small caps that have shown remarkable performance and deserve to be on every investors' watchlist.
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