Correlation Between Cactus and Archrock
Can any of the company-specific risk be diversified away by investing in both Cactus and Archrock 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 Cactus and Archrock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cactus Inc and Archrock, you can compare the effects of market volatilities on Cactus and Archrock 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 Cactus with a short position of Archrock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cactus and Archrock.
Diversification Opportunities for Cactus and Archrock
Almost no diversification
The 3 months correlation between Cactus and Archrock is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Cactus Inc and Archrock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Archrock and Cactus 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 Cactus Inc are associated (or correlated) with Archrock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Archrock has no effect on the direction of Cactus i.e., Cactus and Archrock go up and down completely randomly.
Pair Corralation between Cactus and Archrock
Considering the 90-day investment horizon Cactus is expected to generate 2.79 times less return on investment than Archrock. In addition to that, Cactus is 1.12 times more volatile than Archrock. It trades about 0.04 of its total potential returns per unit of risk. Archrock is currently generating about 0.12 per unit of volatility. If you would invest 881.00 in Archrock on August 27, 2024 and sell it today you would earn a total of 1,705 from holding Archrock or generate 193.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cactus Inc vs. Archrock
Performance |
| Timeline |
| Cactus Inc |
| Archrock |
Cactus and Archrock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cactus and Archrock
The main advantage of trading using opposite Cactus and Archrock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cactus position performs unexpectedly, Archrock 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 Archrock will offset losses from the drop in Archrock's long position.| Cactus vs. ChampionX | Cactus vs. Expro Group Holdings | Cactus vs. Ranger Energy Services | Cactus vs. MRC Global |
| Archrock vs. ProPetro Holding Corp | Archrock vs. Select Energy Services | Archrock vs. USA Compression Partners | Archrock vs. Par Pacific 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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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