Correlation Between Profire Ene and Cactus
Can any of the company-specific risk be diversified away by investing in both Profire Ene 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 Profire Ene and Cactus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Profire Ene and Cactus Inc, you can compare the effects of market volatilities on Profire Ene 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 Profire Ene with a short position of Cactus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Profire Ene and Cactus.
Diversification Opportunities for Profire Ene and Cactus
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Profire and Cactus is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Profire Ene and Cactus Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cactus Inc 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 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 Profire Ene i.e., Profire Ene and Cactus go up and down completely randomly.
Pair Corralation between Profire Ene and Cactus
Given the investment horizon of 90 days Profire Ene is expected to generate 1.84 times more return on investment than Cactus. However, Profire Ene is 1.84 times more volatile than Cactus Inc. It trades about 0.06 of its potential returns per unit of risk. Cactus Inc is currently generating about 0.04 per unit of risk. If you would invest 116.00 in Profire Ene on August 24, 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 | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Profire Ene vs. Cactus Inc
Performance |
| Timeline |
| Profire Ene |
| Cactus Inc |
Profire Ene and Cactus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Profire Ene and Cactus
The main advantage of trading using opposite Profire Ene and Cactus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Profire Ene 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.| Profire Ene vs. Enservco Co | Profire Ene vs. Nine Energy Service | Profire Ene vs. Enerflex | Profire Ene vs. Geospace Technologies |
| 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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