Correlation Between Profire Ene and ProFrac Holding
Can any of the company-specific risk be diversified away by investing in both Profire Ene and ProFrac 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 Profire Ene and ProFrac Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Profire Ene and ProFrac Holding Corp, you can compare the effects of market volatilities on Profire Ene and ProFrac 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 Profire Ene with a short position of ProFrac Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Profire Ene and ProFrac Holding.
Diversification Opportunities for Profire Ene and ProFrac Holding
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Profire and ProFrac is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Profire Ene and ProFrac Holding Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProFrac Holding Corp and Profire Ene 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 Profire Ene are associated (or correlated) with ProFrac Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProFrac Holding Corp has no effect on the direction of Profire Ene i.e., Profire Ene and ProFrac Holding go up and down completely randomly.
Pair Corralation between Profire Ene and ProFrac Holding
Given the investment horizon of 90 days Profire Ene is expected to generate 1.11 times more return on investment than ProFrac Holding. However, Profire Ene is 1.11 times more volatile than ProFrac Holding Corp. It trades about 0.06 of its potential returns per unit of risk. ProFrac Holding Corp is currently generating about -0.03 per unit of risk. If you would invest 116.00 in Profire Ene on August 28, 2024 and sell it today you would earn a total of 136.00 from holding Profire Ene or generate 117.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Profire Ene vs. ProFrac Holding Corp
Performance |
| Timeline |
| Profire Ene |
| ProFrac Holding Corp |
Profire Ene and ProFrac Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Profire Ene and ProFrac Holding
The main advantage of trading using opposite Profire Ene and ProFrac Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Profire Ene position performs unexpectedly, ProFrac 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 ProFrac Holding will offset losses from the drop in ProFrac Holding's long position.| Profire Ene vs. Enservco Co | Profire Ene vs. Nine Energy Service | Profire Ene vs. Enerflex | Profire Ene vs. Geospace Technologies |
| ProFrac Holding vs. Newpark Resources | ProFrac Holding vs. Natural Gas Services | ProFrac Holding vs. Geospace Technologies | ProFrac Holding 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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