Correlation Between Cactus and RPC
Can any of the company-specific risk be diversified away by investing in both Cactus and RPC 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 RPC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cactus Inc and RPC Inc, you can compare the effects of market volatilities on Cactus and RPC 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 RPC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cactus and RPC.
Diversification Opportunities for Cactus and RPC
Weak diversification
The 3 months correlation between Cactus and RPC is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Cactus Inc and RPC Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RPC Inc 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 RPC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RPC Inc has no effect on the direction of Cactus i.e., Cactus and RPC go up and down completely randomly.
Pair Corralation between Cactus and RPC
Considering the 90-day investment horizon Cactus Inc is expected to generate 1.0 times more return on investment than RPC. However, Cactus is 1.0 times more volatile than RPC Inc. It trades about 0.29 of its potential returns per unit of risk. RPC Inc is currently generating about 0.18 per unit of risk. If you would invest 5,759 in Cactus Inc on August 28, 2024 and sell it today you would earn a total of 1,190 from holding Cactus Inc or generate 20.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Cactus Inc vs. RPC Inc
Performance |
| Timeline |
| Cactus Inc |
| RPC Inc |
Cactus and RPC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cactus and RPC
The main advantage of trading using opposite Cactus and RPC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cactus position performs unexpectedly, RPC 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 RPC will offset losses from the drop in RPC's long position.| Cactus vs. ProPetro Holding Corp | Cactus vs. RPC Inc | Cactus vs. MRC Global | Cactus 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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