Correlation Between Schlumberger and ProPetro Holding

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

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

Diversification Opportunities for Schlumberger and ProPetro Holding

-0.02

Correlation Coefficient

Schlumberger  ProPetro Holding

Good diversification

The 3 months correlation between Schlumberger and ProPetro is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Schlumberger NV 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 Schlumberger 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 Schlumberger NV 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 Schlumberger i.e., Schlumberger and ProPetro Holding go up and down completely randomly.

Pair Corralation between Schlumberger and ProPetro Holding

Considering the 90-day investment horizon Schlumberger NV is expected to generate 0.62 times more return on investment than ProPetro Holding. However, Schlumberger NV is 1.61 times less risky than ProPetro Holding. It trades about 0.09 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  3,747  in Schlumberger NV on December 24, 2024 and sell it today you would earn a total of  352.00  from holding Schlumberger NV or generate 9.39% return on investment over 90 days.

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

Schlumberger NV  vs.  ProPetro Holding Corp

Schlumberger NV

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Schlumberger NV are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak essential indicators, Schlumberger may actually be approaching a critical reversion point that can send shares even higher in April 2025.

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 Schlumberger and ProPetro Holding

The main advantage of trading using opposite Schlumberger and ProPetro Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Schlumberger 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 Schlumberger NV 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.