Correlation Between Enerflex and ProPetro Holding

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

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

Diversification Opportunities for Enerflex and ProPetro Holding

0.94

Correlation Coefficient

Enerflex  ProPetro Holding

Almost no diversification

The 3 months correlation between Enerflex and ProPetro is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Enerflex and ProPetro Holding Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProPetro Holding Corp and Enerflex 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 Enerflex are associated (or correlated) with ProPetro Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProPetro Holding Corp has no effect on the direction of Enerflex i.e., Enerflex and ProPetro Holding go up and down completely randomly.

Pair Corralation between Enerflex and ProPetro Holding

Given the investment horizon of 90 days Enerflex is expected to under-perform the ProPetro Holding. But the stock apears to be less risky and, when comparing its historical volatility, Enerflex is 1.24 times less risky than ProPetro Holding. The stock trades about -0.16 of its potential returns per unit of risk. The ProPetro Holding Corp is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest  924.00  in ProPetro Holding Corp on December 30, 2024 and sell it today you would lose (186.00) from holding ProPetro Holding Corp or give up 20.13% of portfolio value over 90 days.

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

Enerflex  vs.  ProPetro Holding Corp

Enerflex

Risk-Adjusted Performance

Very Weak

Over the last 90 days Enerflex has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

ProPetro Holding Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days ProPetro Holding Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's primary indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Enerflex and ProPetro Holding

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

The idea behind Enerflex and ProPetro Holding Corp 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.