Correlation Between ProPetro Holding and Dow Jones
Can any of the company-specific risk be diversified away by investing in both ProPetro Holding and Dow Jones 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 ProPetro Holding and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ProPetro Holding Corp and Dow Jones Industrial, you can compare the effects of market volatilities on ProPetro Holding and Dow Jones 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 ProPetro Holding with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProPetro Holding and Dow Jones.
Diversification Opportunities for ProPetro Holding and Dow Jones
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between ProPetro and Dow is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding ProPetro Holding Corp and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and ProPetro Holding 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 ProPetro Holding Corp are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of ProPetro Holding i.e., ProPetro Holding and Dow Jones go up and down completely randomly.
Pair Corralation between ProPetro Holding and Dow Jones
Given the investment horizon of 90 days ProPetro Holding Corp is expected to generate 2.16 times more return on investment than Dow Jones. However, ProPetro Holding is 2.16 times more volatile than Dow Jones Industrial. It trades about 0.61 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.17 per unit of risk. If you would invest 895.00 in ProPetro Holding Corp on October 20, 2024 and sell it today you would earn a total of 195.00 from holding ProPetro Holding Corp or generate 21.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
ProPetro Holding Corp vs. Dow Jones Industrial
Performance |
| Timeline |
ProPetro Holding and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
ProPetro Holding Corp
Pair trading matchups for ProPetro Holding
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with ProPetro Holding and Dow Jones
The main advantage of trading using opposite ProPetro Holding and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProPetro Holding position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| ProPetro Holding vs. Ranger Energy Services | ProPetro Holding vs. RPC Inc | ProPetro Holding vs. Archrock | ProPetro Holding vs. Bristow Group |
| Dow Jones vs. SkyWest | Dow Jones vs. Air Transport Services | Dow Jones vs. LATAM Airlines Group | Dow Jones vs. Emerson Radio |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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