Correlation Between ProPetro Holding and US Silica

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

Diversification Opportunities for ProPetro Holding and US Silica

0.31

Correlation Coefficient

ProPetro Holding  US Silica

Weak diversification

The 3 months correlation between ProPetro and SLCA is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding ProPetro Holding Corp and US Silica Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Silica Holdings 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 US Silica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US Silica Holdings has no effect on the direction of ProPetro Holding i.e., ProPetro Holding and US Silica go up and down completely randomly.

Pair Corralation between ProPetro Holding and US Silica

If you would invest  824.00  in ProPetro Holding Corp on September 20, 2024 and sell it today you would earn a total of  66.00  from holding ProPetro Holding Corp or generate 8.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	0.0%
Values	Daily Returns

ProPetro Holding Corp  vs.  US Silica Holdings

ProPetro Holding Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ProPetro Holding Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak primary indicators, ProPetro Holding reported solid returns over the last few months and may actually be approaching a breakup point.

US Silica Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days US Silica Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, US Silica is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with ProPetro Holding and US Silica

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

The idea behind ProPetro Holding Corp and US Silica Holdings 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.