Correlation Between Trican Well and Ranger Energy

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

By analyzing existing cross correlation between Trican Well Service and Ranger Energy Services, you can compare the effects of market volatilities on Trican Well 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 Trican Well with a short position of Ranger Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trican Well and Ranger Energy.

Diversification Opportunities for Trican Well and Ranger Energy

0.22

Correlation Coefficient

Trican Well  Ranger Energy

Modest diversification

The 3 months correlation between Trican and Ranger is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Trican Well Service 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 Trican Well 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 Trican Well Service 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 Trican Well i.e., Trican Well and Ranger Energy go up and down completely randomly.

Pair Corralation between Trican Well and Ranger Energy

Assuming the 90 days horizon Trican Well is expected to generate 24.8 times less return on investment than Ranger Energy. But when comparing it to its historical volatility, Trican Well Service is 1.22 times less risky than Ranger Energy. It trades about 0.01 of its potential returns per unit of risk. Ranger Energy Services is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  1,019  in Ranger Energy Services on September 30, 2024 and sell it today you would earn a total of  455.00  from holding Ranger Energy Services or generate 44.65% return on investment over 90 days.

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

Trican Well Service  vs.  Ranger Energy Services

Trican Well Service

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Trican Well Service has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Trican Well is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Ranger Energy Services

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ranger Energy Services are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical and fundamental indicators, Ranger Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Trican Well and Ranger Energy

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