Correlation Between Smart Sand and Cactus
Can any of the company-specific risk be diversified away by investing in both Smart Sand 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 Smart Sand and Cactus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Smart Sand and Cactus Inc, you can compare the effects of market volatilities on Smart Sand 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 Smart Sand with a short position of Cactus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smart Sand and Cactus.
Diversification Opportunities for Smart Sand and Cactus
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Smart and Cactus is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Smart Sand and Cactus Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cactus Inc 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 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 Smart Sand i.e., Smart Sand and Cactus go up and down completely randomly.
Pair Corralation between Smart Sand and Cactus
Considering the 90-day investment horizon Smart Sand is expected to generate 1.19 times less return on investment than Cactus. In addition to that, Smart Sand is 1.63 times more volatile than Cactus Inc. It trades about 0.15 of its total potential returns per unit of risk. Cactus Inc is currently generating about 0.28 per unit of volatility. If you would invest 5,759 in Cactus Inc on August 27, 2024 and sell it today you would earn a total of 1,140 from holding Cactus Inc or generate 19.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Smart Sand vs. Cactus Inc
Performance |
| Timeline |
| Smart Sand |
| Cactus Inc |
Smart Sand and Cactus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smart Sand and Cactus
The main advantage of trading using opposite Smart Sand and Cactus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smart Sand 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.| Smart Sand vs. ProPetro Holding Corp | Smart Sand vs. RPC Inc | Smart Sand vs. MRC Global | Smart Sand vs. Expro Group Holdings |
| 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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