Correlation Between RPC and Cactus
Can any of the company-specific risk be diversified away by investing in both RPC and Cactus 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 RPC and Cactus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RPC Inc and Cactus Inc, you can compare the effects of market volatilities on RPC and Cactus 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 RPC with a short position of Cactus. Check out your portfolio center. Please also check ongoing floating volatility patterns of RPC and Cactus.
Diversification Opportunities for RPC and Cactus
Weak diversification
The 3 months correlation between RPC and Cactus is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding RPC Inc and Cactus Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cactus Inc and RPC 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 RPC Inc are associated (or correlated) with Cactus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cactus Inc has no effect on the direction of RPC i.e., RPC and Cactus go up and down completely randomly.
Pair Corralation between RPC and Cactus
Considering the 90-day investment horizon RPC is expected to generate 18.12 times less return on investment than Cactus. In addition to that, RPC is 1.16 times more volatile than Cactus Inc. It trades about 0.0 of its total potential returns per unit of risk. Cactus Inc is currently generating about 0.08 per unit of volatility. If you would invest 3,877 in Cactus Inc on November 9, 2024 and sell it today you would earn a total of 2,101 from holding Cactus Inc or generate 54.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
RPC Inc vs. Cactus Inc
Performance |
| Timeline |
| RPC Inc |
| Cactus Inc |
RPC and Cactus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RPC and Cactus
The main advantage of trading using opposite RPC and Cactus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RPC position performs unexpectedly, Cactus 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 Cactus will offset losses from the drop in Cactus' long position.The idea behind RPC Inc and Cactus Inc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Cactus vs. ChampionX | Cactus vs. Expro Group Holdings | Cactus vs. Ranger Energy Services | Cactus vs. MRC Global |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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