Correlation Between Pardee Resources and Cactus
Can any of the company-specific risk be diversified away by investing in both Pardee Resources and Cactus 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 Pardee Resources and Cactus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pardee Resources Co and Cactus Inc, you can compare the effects of market volatilities on Pardee Resources and Cactus 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 Pardee Resources with a short position of Cactus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pardee Resources and Cactus.
Diversification Opportunities for Pardee Resources and Cactus
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Pardee and Cactus is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Pardee Resources Co and Cactus Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cactus Inc and Pardee Resources 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 Pardee Resources Co are associated (or correlated) with Cactus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cactus Inc has no effect on the direction of Pardee Resources i.e., Pardee Resources and Cactus go up and down completely randomly.
Pair Corralation between Pardee Resources and Cactus
Given the investment horizon of 90 days Pardee Resources is expected to generate 2.11 times less return on investment than Cactus. But when comparing it to its historical volatility, Pardee Resources Co is 1.9 times less risky than Cactus. It trades about 0.11 of its potential returns per unit of risk. Cactus Inc is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 4,726 in Cactus Inc on September 3, 2024 and sell it today you would earn a total of 2,140 from holding Cactus Inc or generate 45.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.2% |
| Values | Daily Returns |
Pardee Resources Co vs. Cactus Inc
Performance |
| Timeline |
| Pardee Resources |
| Cactus Inc |
Pardee Resources and Cactus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pardee Resources and Cactus
The main advantage of trading using opposite Pardee Resources and Cactus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pardee Resources position performs unexpectedly, Cactus 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 Cactus will offset losses from the drop in Cactus' long position.| Pardee Resources vs. Expro Group Holdings | Pardee Resources vs. ChampionX | Pardee Resources vs. Ranger Energy Services | Pardee Resources vs. Cactus Inc |
| Cactus vs. ChampionX | Cactus vs. Expro Group Holdings | Cactus vs. Ranger Energy Services | Cactus vs. MRC Global |
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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