Correlation Between ProFrac Holding and Weatherford International

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

Diversification Opportunities for ProFrac Holding and Weatherford International

-0.04

Correlation Coefficient

ProFrac Holding  Weatherford International

Good diversification

The 3 months correlation between ProFrac and Weatherford is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding ProFrac Holding Corp and Weatherford International Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weatherford 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 Weatherford International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Weatherford International has no effect on the direction of ProFrac Holding i.e., ProFrac Holding and Weatherford International go up and down completely randomly.

Pair Corralation between ProFrac Holding and Weatherford International

If you would invest  727.00  in ProFrac Holding Corp on September 30, 2024 and sell it today you would earn a total of  6.00  from holding ProFrac Holding Corp or generate 0.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	0.79%
Values	Daily Returns

ProFrac Holding Corp  vs.  Weatherford International Plc

ProFrac Holding Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ProFrac Holding Corp are ranked lower than 3 (%) 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.

Weatherford International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Weatherford International Plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Weatherford International is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with ProFrac Holding and Weatherford International

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

The idea behind ProFrac Holding Corp and Weatherford International Plc 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.