Correlation Between Cactus and Ranger Energy

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

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

Diversification Opportunities for Cactus and Ranger Energy

0.8

Correlation Coefficient

Cactus  Ranger Energy

Very poor diversification

The 3 months correlation between Cactus and Ranger is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Cactus Inc 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 Cactus 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 Cactus Inc 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 Cactus i.e., Cactus and Ranger Energy go up and down completely randomly.

Pair Corralation between Cactus and Ranger Energy

Considering the 90-day investment horizon Cactus Inc is expected to under-perform the Ranger Energy. But the stock apears to be less risky and, when comparing its historical volatility, Cactus Inc is 1.08 times less risky than Ranger Energy. The stock trades about -0.16 of its potential returns per unit of risk. The Ranger Energy Services is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  1,517  in Ranger Energy Services on December 28, 2024 and sell it today you would lose (91.00) from holding Ranger Energy Services or give up 6.0% of portfolio value over 90 days.

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

Cactus Inc  vs.  Ranger Energy Services

Cactus Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cactus Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Ranger Energy Services

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ranger Energy Services has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, Ranger Energy is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Cactus and Ranger Energy

The main advantage of trading using opposite Cactus and Ranger Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cactus 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 Cactus Inc 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 Stocks Directory module to find actively traded stocks across global markets.