Correlation Between ProFrac Holding and Solaris Oilfield

Can any of the company-specific risk be diversified away by investing in both ProFrac Holding and Solaris Oilfield 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 Solaris Oilfield 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 Solaris Oilfield Infrastructure, you can compare the effects of market volatilities on ProFrac Holding and Solaris Oilfield 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 Solaris Oilfield. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProFrac Holding and Solaris Oilfield.

Diversification Opportunities for ProFrac Holding and Solaris Oilfield

0.07

Correlation Coefficient

ProFrac Holding  Solaris Oilfield

Significant diversification

The 3 months correlation between ProFrac and Solaris is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding ProFrac Holding Corp and Solaris Oilfield Infrastructur in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solaris Oilfield Inf 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 Solaris Oilfield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solaris Oilfield Inf has no effect on the direction of ProFrac Holding i.e., ProFrac Holding and Solaris Oilfield go up and down completely randomly.

Pair Corralation between ProFrac Holding and Solaris Oilfield

If you would invest  581.00  in ProFrac Holding Corp on September 19, 2024 and sell it today you would earn a total of  176.00  from holding ProFrac Holding Corp or generate 30.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	2.38%
Values	Daily Returns

ProFrac Holding Corp  vs.  Solaris Oilfield Infrastructur

ProFrac Holding Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ProFrac Holding Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, ProFrac Holding exhibited solid returns over the last few months and may actually be approaching a breakup point.

Solaris Oilfield Inf

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Solaris Oilfield Infrastructure has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Solaris Oilfield is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with ProFrac Holding and Solaris Oilfield

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

The idea behind ProFrac Holding Corp and Solaris Oilfield Infrastructure 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.