Correlation Between MRC Global and Smart Sand
Can any of the company-specific risk be diversified away by investing in both MRC Global and Smart Sand 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 MRC Global and Smart Sand into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MRC Global and Smart Sand, you can compare the effects of market volatilities on MRC Global and Smart Sand 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 MRC Global with a short position of Smart Sand. Check out your portfolio center. Please also check ongoing floating volatility patterns of MRC Global and Smart Sand.
Diversification Opportunities for MRC Global and Smart Sand
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MRC and Smart is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding MRC Global and Smart Sand in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smart Sand and MRC Global 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 MRC Global are associated (or correlated) with Smart Sand. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smart Sand has no effect on the direction of MRC Global i.e., MRC Global and Smart Sand go up and down completely randomly.
Pair Corralation between MRC Global and Smart Sand
Considering the 90-day investment horizon MRC Global is expected to under-perform the Smart Sand. But the stock apears to be less risky and, when comparing its historical volatility, MRC Global is 1.22 times less risky than Smart Sand. The stock trades about -0.1 of its potential returns per unit of risk. The Smart Sand is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 244.00 in Smart Sand on November 18, 2024 and sell it today you would lose (15.00) from holding Smart Sand or give up 6.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MRC Global vs. Smart Sand
Performance |
| Timeline |
| MRC Global |
| Smart Sand |
MRC Global and Smart Sand Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MRC Global and Smart Sand
The main advantage of trading using opposite MRC Global and Smart Sand positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MRC Global position performs unexpectedly, Smart Sand 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 Smart Sand will offset losses from the drop in Smart Sand's long position.| MRC Global vs. NOV Inc | MRC Global vs. Ranger Energy Services | MRC Global vs. Oil States International | MRC Global vs. Geospace Technologies |
| Smart Sand vs. Liberty Oilfield Services | Smart Sand vs. RPC Inc | Smart Sand vs. MRC Global | Smart Sand vs. Ranger Energy Services |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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