Correlation Between RPC and ProFrac Holding

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

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

Diversification Opportunities for RPC and ProFrac Holding

0.18

Correlation Coefficient

RPC  ProFrac Holding

Average diversification

The 3 months correlation between RPC and ProFrac is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding RPC Inc 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 RPC 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 RPC Inc 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 RPC i.e., RPC and ProFrac Holding go up and down completely randomly.

Pair Corralation between RPC and ProFrac Holding

Considering the 90-day investment horizon RPC Inc is expected to under-perform the ProFrac Holding. But the stock apears to be less risky and, when comparing its historical volatility, RPC Inc is 1.53 times less risky than ProFrac Holding. The stock trades about -0.05 of its potential returns per unit of risk. The ProFrac Holding Corp is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  836.00  in ProFrac Holding Corp on October 5, 2024 and sell it today you would lose (17.00) from holding ProFrac Holding Corp or give up 2.03% of portfolio value over 90 days.

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

RPC Inc  vs.  ProFrac Holding Corp

RPC Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RPC Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

ProFrac Holding Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ProFrac Holding Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, ProFrac Holding exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with RPC and ProFrac Holding

The main advantage of trading using opposite RPC and ProFrac Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RPC 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 RPC Inc 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.