Correlation Between ProPetro Holding and USA Compression
Can any of the company-specific risk be diversified away by investing in both ProPetro Holding and USA Compression 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 USA Compression 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 USA Compression Partners, you can compare the effects of market volatilities on ProPetro Holding and USA Compression 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 USA Compression. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProPetro Holding and USA Compression.
Diversification Opportunities for ProPetro Holding and USA Compression
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ProPetro and USA is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding ProPetro Holding Corp and USA Compression Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on USA Compression Partners 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 USA Compression. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of USA Compression Partners has no effect on the direction of ProPetro Holding i.e., ProPetro Holding and USA Compression go up and down completely randomly.
Pair Corralation between ProPetro Holding and USA Compression
Given the investment horizon of 90 days ProPetro Holding Corp is expected to generate 3.11 times more return on investment than USA Compression. However, ProPetro Holding is 3.11 times more volatile than USA Compression Partners. It trades about 0.11 of its potential returns per unit of risk. USA Compression Partners is currently generating about 0.21 per unit of risk. If you would invest 775.00 in ProPetro Holding Corp on August 26, 2024 and sell it today you would earn a total of 75.00 from holding ProPetro Holding Corp or generate 9.68% 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. USA Compression Partners
Performance |
| Timeline |
| ProPetro Holding Corp |
| USA Compression Partners |
ProPetro Holding and USA Compression Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProPetro Holding and USA Compression
The main advantage of trading using opposite ProPetro Holding and USA Compression positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProPetro Holding position performs unexpectedly, USA Compression 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 USA Compression will offset losses from the drop in USA Compression's long position.| ProPetro Holding vs. Ranger Energy Services | ProPetro Holding vs. Newpark Resources | ProPetro Holding vs. RPC Inc | ProPetro Holding vs. Archrock |
| USA Compression vs. ProPetro Holding Corp | USA Compression vs. RPC Inc | USA Compression vs. MRC Global | USA Compression vs. Expro Group Holdings |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
Other Complementary Tools
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Positions Ratings 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 | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation |