Correlation Between ProPetro Holding and MRC Global
Can any of the company-specific risk be diversified away by investing in both ProPetro Holding and MRC Global 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 MRC Global 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 MRC Global, you can compare the effects of market volatilities on ProPetro Holding and MRC Global 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 MRC Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProPetro Holding and MRC Global.
Diversification Opportunities for ProPetro Holding and MRC Global
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ProPetro and MRC is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding ProPetro Holding Corp and MRC Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MRC Global 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 MRC Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MRC Global has no effect on the direction of ProPetro Holding i.e., ProPetro Holding and MRC Global go up and down completely randomly.
Pair Corralation between ProPetro Holding and MRC Global
Given the investment horizon of 90 days ProPetro Holding Corp is expected to under-perform the MRC Global. In addition to that, ProPetro Holding is 1.63 times more volatile than MRC Global. It trades about -0.01 of its total potential returns per unit of risk. MRC Global is currently generating about 0.45 per unit of volatility. If you would invest 1,278 in MRC Global on November 1, 2024 and sell it today you would earn a total of 236.00 from holding MRC Global or generate 18.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProPetro Holding Corp vs. MRC Global
Performance |
| Timeline |
| ProPetro Holding Corp |
| MRC Global |
ProPetro Holding and MRC Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProPetro Holding and MRC Global
The main advantage of trading using opposite ProPetro Holding and MRC Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProPetro Holding position performs unexpectedly, MRC Global 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 MRC Global will offset losses from the drop in MRC Global's long position.| ProPetro Holding vs. Ranger Energy Services | ProPetro Holding vs. RPC Inc | ProPetro Holding vs. Archrock | ProPetro Holding vs. Bristow Group |
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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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