Correlation Between ProPetro Holding and Ranger Energy

Can any of the company-specific risk be diversified away by investing in both ProPetro Holding and Ranger Energy 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 Ranger Energy 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 Ranger Energy Services, you can compare the effects of market volatilities on ProPetro Holding and Ranger Energy 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 Ranger Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProPetro Holding and Ranger Energy.

Diversification Opportunities for ProPetro Holding and Ranger Energy

0.6

Correlation Coefficient

ProPetro Holding  Ranger Energy

Poor diversification

The 3 months correlation between ProPetro and Ranger is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding ProPetro Holding Corp and Ranger Energy Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ranger Energy Services 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 Ranger Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ranger Energy Services has no effect on the direction of ProPetro Holding i.e., ProPetro Holding and Ranger Energy go up and down completely randomly.

Pair Corralation between ProPetro Holding and Ranger Energy

Given the investment horizon of 90 days ProPetro Holding Corp is expected to under-perform the Ranger Energy. In addition to that, ProPetro Holding is 1.3 times more volatile than Ranger Energy Services. It trades about -0.11 of its total potential returns per unit of risk. Ranger Energy Services is currently generating about 0.0 per unit of volatility. If you would invest  1,517  in Ranger Energy Services on December 29, 2024 and sell it today you would lose (28.00) from holding Ranger Energy Services or give up 1.85% of portfolio value over 90 days.

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

ProPetro Holding Corp  vs.  Ranger Energy Services

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.

Ranger Energy Services

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ranger Energy Services has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, Ranger Energy is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with ProPetro Holding and Ranger Energy

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

The idea behind ProPetro Holding Corp and Ranger Energy Services 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.