Correlation Between Liberty Oilfield and ProPetro Holding
Can any of the company-specific risk be diversified away by investing in both Liberty Oilfield and ProPetro Holding 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 Liberty Oilfield and ProPetro Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Liberty Oilfield Services and ProPetro Holding Corp, you can compare the effects of market volatilities on Liberty Oilfield and ProPetro Holding 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 Liberty Oilfield with a short position of ProPetro Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liberty Oilfield and ProPetro Holding.
Diversification Opportunities for Liberty Oilfield and ProPetro Holding
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Liberty and ProPetro is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Oilfield Services and ProPetro Holding Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProPetro Holding Corp and Liberty Oilfield 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 Liberty Oilfield Services are associated (or correlated) with ProPetro Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProPetro Holding Corp has no effect on the direction of Liberty Oilfield i.e., Liberty Oilfield and ProPetro Holding go up and down completely randomly.
Pair Corralation between Liberty Oilfield and ProPetro Holding
Given the investment horizon of 90 days Liberty Oilfield Services is expected to under-perform the ProPetro Holding. In addition to that, Liberty Oilfield is 1.2 times more volatile than ProPetro Holding Corp. It trades about -0.03 of its total potential returns per unit of risk. ProPetro Holding Corp is currently generating about -0.01 per unit of volatility. If you would invest 933.00 in ProPetro Holding Corp on November 1, 2024 and sell it today you would lose (13.00) from holding ProPetro Holding Corp or give up 1.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Liberty Oilfield Services vs. ProPetro Holding Corp
Performance |
| Timeline |
| Liberty Oilfield Services |
| ProPetro Holding Corp |
Liberty Oilfield and ProPetro Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Liberty Oilfield and ProPetro Holding
The main advantage of trading using opposite Liberty Oilfield and ProPetro Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liberty Oilfield position performs unexpectedly, ProPetro Holding 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 ProPetro Holding will offset losses from the drop in ProPetro Holding's long position.| Liberty Oilfield vs. Ranger Energy Services | Liberty Oilfield vs. ProFrac Holding Corp | Liberty Oilfield vs. Archrock | Liberty Oilfield vs. Bristow Group |
| ProPetro Holding vs. Ranger Energy Services | ProPetro Holding vs. RPC Inc | ProPetro Holding vs. Archrock | ProPetro Holding vs. Bristow Group |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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