Correlation Between MRC Global and ProFrac Holding

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

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

Diversification Opportunities for MRC Global and ProFrac Holding

0.52

Correlation Coefficient

MRC Global  ProFrac Holding

Very weak diversification

The 3 months correlation between MRC and ProFrac is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding MRC Global and ProFrac Holding Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProFrac Holding Corp and MRC Global 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 MRC Global are associated (or correlated) with ProFrac Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProFrac Holding Corp has no effect on the direction of MRC Global i.e., MRC Global and ProFrac Holding go up and down completely randomly.

Pair Corralation between MRC Global and ProFrac Holding

Considering the 90-day investment horizon MRC Global is expected to generate 0.56 times more return on investment than ProFrac Holding. However, MRC Global is 1.79 times less risky than ProFrac Holding. It trades about -0.1 of its potential returns per unit of risk. ProFrac Holding Corp is currently generating about -0.06 per unit of risk. If you would invest  1,407  in MRC Global on December 1, 2024 and sell it today you would lose (190.00) from holding MRC Global or give up 13.5% of portfolio value over 90 days.

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

MRC Global  vs.  ProFrac Holding Corp

MRC Global

Risk-Adjusted Performance

Very Weak

Over the last 90 days MRC Global 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 basic 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.

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.

Pair Trading with MRC Global and ProFrac Holding

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

The idea behind MRC Global and ProFrac 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.