Correlation Between Liberty Oilfield and RPC
Can any of the company-specific risk be diversified away by investing in both Liberty Oilfield and RPC 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 RPC 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 RPC Inc, you can compare the effects of market volatilities on Liberty Oilfield and RPC 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 RPC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liberty Oilfield and RPC.
Diversification Opportunities for Liberty Oilfield and RPC
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Liberty and RPC is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Oilfield Services and RPC Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RPC Inc 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 RPC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RPC Inc has no effect on the direction of Liberty Oilfield i.e., Liberty Oilfield and RPC go up and down completely randomly.
Pair Corralation between Liberty Oilfield and RPC
Given the investment horizon of 90 days Liberty Oilfield Services is expected to generate 1.54 times more return on investment than RPC. However, Liberty Oilfield is 1.54 times more volatile than RPC Inc. It trades about 0.52 of its potential returns per unit of risk. RPC Inc is currently generating about 0.8 per unit of risk. If you would invest 1,827 in Liberty Oilfield Services on October 20, 2024 and sell it today you would earn a total of 436.00 from holding Liberty Oilfield Services or generate 23.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Liberty Oilfield Services vs. RPC Inc
Performance |
| Timeline |
| Liberty Oilfield Services |
| RPC Inc |
Liberty Oilfield and RPC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Liberty Oilfield and RPC
The main advantage of trading using opposite Liberty Oilfield and RPC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liberty Oilfield position performs unexpectedly, RPC 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 RPC will offset losses from the drop in RPC's long position.| Liberty Oilfield vs. Ranger Energy Services | Liberty Oilfield vs. ProFrac Holding Corp | Liberty Oilfield vs. Archrock | Liberty Oilfield 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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