Correlation Between National Energy and ProPetro Holding

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

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

Diversification Opportunities for National Energy and ProPetro Holding

-0.32

Correlation Coefficient

National Energy  ProPetro Holding

Very good diversification

The 3 months correlation between National and ProPetro is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding National Energy Services 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 National Energy 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 National Energy Services 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 National Energy i.e., National Energy and ProPetro Holding go up and down completely randomly.

Pair Corralation between National Energy and ProPetro Holding

Given the investment horizon of 90 days National Energy Services is expected to generate 1.62 times more return on investment than ProPetro Holding. However, National Energy is 1.62 times more volatile than ProPetro Holding Corp. It trades about 0.0 of its potential returns per unit of risk. ProPetro Holding Corp is currently generating about -0.46 per unit of risk. If you would invest  920.00  in National Energy Services on August 4, 2024 and sell it today you would lose (15.00) from holding National Energy Services or give up 1.63% of portfolio value over 90 days.

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

National Energy Services  vs.  ProPetro Holding Corp

National Energy Services

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in National Energy Services are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal basic indicators, National Energy may actually be approaching a critical reversion point that can send shares even higher in December 2024.

ProPetro Holding Corp

Risk-Adjusted Performance

0 of 100

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 abnormal performance in the last few months, the Stock's primary indicators remain relatively invariable which may send shares a bit higher in December 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with National Energy and ProPetro Holding

The main advantage of trading using opposite National Energy and ProPetro Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Energy 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 National Energy Services 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.