Correlation Between ProPetro Holding and Natural Gas
Can any of the company-specific risk be diversified away by investing in both ProPetro Holding and Natural Gas 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 Natural Gas 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 Natural Gas Services, you can compare the effects of market volatilities on ProPetro Holding and Natural Gas 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 Natural Gas. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProPetro Holding and Natural Gas.
Diversification Opportunities for ProPetro Holding and Natural Gas
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between ProPetro and Natural is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding ProPetro Holding Corp and Natural Gas Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Natural Gas Services 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 Natural Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Natural Gas Services has no effect on the direction of ProPetro Holding i.e., ProPetro Holding and Natural Gas go up and down completely randomly.
Pair Corralation between ProPetro Holding and Natural Gas
Given the investment horizon of 90 days ProPetro Holding is expected to generate 17.05 times less return on investment than Natural Gas. In addition to that, ProPetro Holding is 1.1 times more volatile than Natural Gas Services. It trades about 0.0 of its total potential returns per unit of risk. Natural Gas Services is currently generating about 0.08 per unit of volatility. If you would invest 1,096 in Natural Gas Services on August 24, 2024 and sell it today you would earn a total of 1,692 from holding Natural Gas Services or generate 154.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProPetro Holding Corp vs. Natural Gas Services
Performance |
| Timeline |
| ProPetro Holding Corp |
| Natural Gas Services |
ProPetro Holding and Natural Gas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProPetro Holding and Natural Gas
The main advantage of trading using opposite ProPetro Holding and Natural Gas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProPetro Holding position performs unexpectedly, Natural Gas 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 Natural Gas will offset losses from the drop in Natural Gas' long position.| ProPetro Holding vs. Ranger Energy Services | ProPetro Holding vs. Newpark Resources | ProPetro Holding vs. RPC Inc | ProPetro Holding vs. Archrock |
| Natural Gas vs. Enerflex | Natural Gas vs. Forum Energy Technologies | Natural Gas vs. Archrock | Natural Gas vs. Geospace Technologies |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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