Correlation Between Profire Ene and Liberty Oilfield
Can any of the company-specific risk be diversified away by investing in both Profire Ene and Liberty 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 Profire Ene and Liberty Oilfield into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Profire Ene and Liberty Oilfield Services, you can compare the effects of market volatilities on Profire Ene and Liberty 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 Profire Ene with a short position of Liberty Oilfield. Check out your portfolio center. Please also check ongoing floating volatility patterns of Profire Ene and Liberty Oilfield.
Diversification Opportunities for Profire Ene and Liberty Oilfield
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Profire and Liberty is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Profire Ene and Liberty Oilfield Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liberty Oilfield Services and Profire Ene 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 Profire Ene are associated (or correlated) with Liberty Oilfield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liberty Oilfield Services has no effect on the direction of Profire Ene i.e., Profire Ene and Liberty Oilfield go up and down completely randomly.
Pair Corralation between Profire Ene and Liberty Oilfield
Given the investment horizon of 90 days Profire Ene is expected to generate 2.05 times more return on investment than Liberty Oilfield. However, Profire Ene is 2.05 times more volatile than Liberty Oilfield Services. It trades about 0.16 of its potential returns per unit of risk. Liberty Oilfield Services is currently generating about 0.0 per unit of risk. If you would invest 147.00 in Profire Ene on September 12, 2024 and sell it today you would earn a total of 106.00 from holding Profire Ene or generate 72.11% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Profire Ene vs. Liberty Oilfield Services
Performance |
Timeline |
Profire Ene |
Liberty Oilfield Services |
Profire Ene and Liberty Oilfield Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Profire Ene and Liberty Oilfield
The main advantage of trading using opposite Profire Ene and Liberty Oilfield positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Profire Ene position performs unexpectedly, Liberty 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 Liberty Oilfield will offset losses from the drop in Liberty Oilfield's long position.Profire Ene vs. Nine Energy Service | Profire Ene vs. Enerflex | Profire Ene vs. Geospace Technologies | Profire Ene vs. Natural Gas Services |
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Check out your portfolio center.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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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