Correlation Between Nextier Oilfield and ProFrac Holding

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

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

Diversification Opportunities for Nextier Oilfield and ProFrac Holding

0.0

Correlation Coefficient

Nextier Oilfield  ProFrac Holding

Pay attention - limited upside

The 3 months correlation between Nextier and ProFrac is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Nextier Oilfield Solutions 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 Nextier Oilfield 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 Nextier Oilfield Solutions 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 Nextier Oilfield i.e., Nextier Oilfield and ProFrac Holding go up and down completely randomly.

Pair Corralation between Nextier Oilfield and ProFrac Holding

If you would invest  786.00  in ProFrac Holding Corp on December 29, 2024 and sell it today you would lose (15.00) from holding ProFrac Holding Corp or give up 1.91% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Nextier Oilfield Solutions  vs.  ProFrac Holding Corp

Nextier Oilfield Sol

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nextier Oilfield Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Nextier Oilfield is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

ProFrac Holding Corp

Risk-Adjusted Performance

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 rather sound fundamental indicators, ProFrac Holding is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Nextier Oilfield and ProFrac Holding

The main advantage of trading using opposite Nextier Oilfield and ProFrac Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nextier Oilfield 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 Nextier Oilfield Solutions 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.