Correlation Between ProFrac Holding and Oil States

Can any of the company-specific risk be diversified away by investing in both ProFrac Holding and Oil States 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 ProFrac Holding and Oil States into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ProFrac Holding Corp and Oil States International, you can compare the effects of market volatilities on ProFrac Holding and Oil States 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 ProFrac Holding with a short position of Oil States. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProFrac Holding and Oil States.

Diversification Opportunities for ProFrac Holding and Oil States

0.64

Correlation Coefficient

ProFrac Holding  Oil States

Poor diversification

The 3 months correlation between ProFrac and Oil is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding ProFrac Holding Corp and Oil States International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oil States International and ProFrac Holding 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 ProFrac Holding Corp are associated (or correlated) with Oil States. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oil States International has no effect on the direction of ProFrac Holding i.e., ProFrac Holding and Oil States go up and down completely randomly.

Pair Corralation between ProFrac Holding and Oil States

Given the investment horizon of 90 days ProFrac Holding Corp is expected to under-perform the Oil States. In addition to that, ProFrac Holding is 1.41 times more volatile than Oil States International. It trades about -0.06 of its total potential returns per unit of risk. Oil States International is currently generating about -0.01 per unit of volatility. If you would invest  558.00  in Oil States International on December 1, 2024 and sell it today you would lose (24.00) from holding Oil States International or give up 4.3% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

ProFrac Holding Corp  vs.  Oil States International

ProFrac Holding Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days ProFrac Holding Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Oil States International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Oil States International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward indicators, Oil States is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with ProFrac Holding and Oil States

The main advantage of trading using opposite ProFrac Holding and Oil States positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProFrac Holding position performs unexpectedly, Oil States 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 Oil States will offset losses from the drop in Oil States' long position.

The idea behind ProFrac Holding Corp and Oil States International 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.

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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.