Correlation Between ProPetro Holding and Now

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

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

Diversification Opportunities for ProPetro Holding and Now

-0.38

Correlation Coefficient

ProPetro Holding  Now

Very good diversification

The 3 months correlation between ProPetro and Now is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding ProPetro Holding Corp and Now Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Now Inc and ProPetro 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 ProPetro Holding Corp are associated (or correlated) with Now. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Now Inc has no effect on the direction of ProPetro Holding i.e., ProPetro Holding and Now go up and down completely randomly.

Pair Corralation between ProPetro Holding and Now

Given the investment horizon of 90 days ProPetro Holding is expected to generate 2.17 times less return on investment than Now. In addition to that, ProPetro Holding is 1.08 times more volatile than Now Inc. It trades about 0.02 of its total potential returns per unit of risk. Now Inc is currently generating about 0.05 per unit of volatility. If you would invest  1,505  in Now Inc on November 28, 2024 and sell it today you would earn a total of  107.00  from holding Now Inc or generate 7.11% return on investment over 90 days.

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

ProPetro Holding Corp  vs.  Now Inc

ProPetro Holding Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ProPetro Holding Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable primary indicators, ProPetro Holding is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Now Inc

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Now Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Now may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with ProPetro Holding and Now

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

The idea behind ProPetro Holding Corp and Now Inc 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.