Correlation Between Smart Sand and Ranger Energy
Can any of the company-specific risk be diversified away by investing in both Smart Sand and Ranger Energy 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 Smart Sand and Ranger Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Smart Sand and Ranger Energy Services, you can compare the effects of market volatilities on Smart Sand and Ranger Energy 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 Smart Sand with a short position of Ranger Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smart Sand and Ranger Energy.
Diversification Opportunities for Smart Sand and Ranger Energy
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Smart and Ranger is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Smart Sand and Ranger Energy Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ranger Energy Services and Smart Sand 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 Smart Sand are associated (or correlated) with Ranger Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ranger Energy Services has no effect on the direction of Smart Sand i.e., Smart Sand and Ranger Energy go up and down completely randomly.
Pair Corralation between Smart Sand and Ranger Energy
Considering the 90-day investment horizon Smart Sand is expected to generate 1.45 times less return on investment than Ranger Energy. In addition to that, Smart Sand is 1.32 times more volatile than Ranger Energy Services. It trades about 0.06 of its total potential returns per unit of risk. Ranger Energy Services is currently generating about 0.11 per unit of volatility. If you would invest 989.00 in Ranger Energy Services on September 4, 2024 and sell it today you would earn a total of 697.00 from holding Ranger Energy Services or generate 70.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Smart Sand vs. Ranger Energy Services
Performance |
| Timeline |
| Smart Sand |
| Ranger Energy Services |
Smart Sand and Ranger Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smart Sand and Ranger Energy
The main advantage of trading using opposite Smart Sand and Ranger Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smart Sand position performs unexpectedly, Ranger Energy 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 Ranger Energy will offset losses from the drop in Ranger Energy's long position.| Smart Sand vs. Liberty Oilfield Services | Smart Sand vs. RPC Inc | Smart Sand vs. MRC Global | Smart Sand vs. Ranger Energy Services |
| Ranger Energy vs. Newpark Resources | Ranger Energy vs. ProPetro Holding Corp | Ranger Energy vs. RPC Inc | Ranger Energy 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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