Correlation Between ProPetro Holding and RPC
Can any of the company-specific risk be diversified away by investing in both ProPetro Holding and RPC 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 RPC 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 RPC Inc, you can compare the effects of market volatilities on ProPetro Holding and RPC 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 RPC. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProPetro Holding and RPC.
Diversification Opportunities for ProPetro Holding and RPC
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ProPetro and RPC is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding ProPetro Holding Corp and RPC Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RPC Inc 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 RPC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RPC Inc has no effect on the direction of ProPetro Holding i.e., ProPetro Holding and RPC go up and down completely randomly.
Pair Corralation between ProPetro Holding and RPC
Given the investment horizon of 90 days ProPetro Holding Corp is expected to under-perform the RPC. In addition to that, ProPetro Holding is 1.04 times more volatile than RPC Inc. It trades about -0.02 of its total potential returns per unit of risk. RPC Inc is currently generating about 0.0 per unit of volatility. If you would invest 677.00 in RPC Inc on August 26, 2024 and sell it today you would lose (34.00) from holding RPC Inc or give up 5.02% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ProPetro Holding Corp vs. RPC Inc
Performance |
| Timeline |
| ProPetro Holding Corp |
| RPC Inc |
ProPetro Holding and RPC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProPetro Holding and RPC
The main advantage of trading using opposite ProPetro Holding and RPC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProPetro Holding position performs unexpectedly, RPC 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 RPC will offset losses from the drop in RPC's long position.| ProPetro Holding vs. Ranger Energy Services | ProPetro Holding vs. Newpark Resources | ProPetro Holding vs. RPC Inc | ProPetro Holding vs. Archrock |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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