Correlation Between RPC and ProPetro Holding

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

Diversification Opportunities for RPC and ProPetro Holding

0.91

Correlation Coefficient

RPC  ProPetro Holding

Almost no diversification

The 3 months correlation between RPC and ProPetro is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding RPC Inc and ProPetro Holding Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProPetro 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 ProPetro Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProPetro Holding Corp has no effect on the direction of RPC i.e., RPC and ProPetro Holding go up and down completely randomly.

Pair Corralation between RPC and ProPetro Holding

Considering the 90-day investment horizon RPC Inc is expected to generate 0.74 times more return on investment than ProPetro Holding. However, RPC Inc is 1.36 times less risky than ProPetro Holding. It trades about -0.02 of its potential returns per unit of risk. ProPetro Holding Corp is currently generating about -0.11 per unit of risk. If you would invest  581.00  in RPC Inc on December 28, 2024 and sell it today you would lose (25.00) from holding RPC Inc or give up 4.3% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.36%
Values	Daily Returns

RPC Inc  vs.  ProPetro Holding Corp

RPC Inc

Risk-Adjusted Performance

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 comparatively stable technical and fundamental indicators, RPC is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

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.

Pair Trading with RPC and ProPetro Holding

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

The idea behind RPC Inc and ProPetro 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.