Correlation Between Prairie Provident and Unit

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

By analyzing existing cross correlation between Prairie Provident Resources and Unit Corporation, you can compare the effects of market volatilities on Prairie Provident and Unit 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 Prairie Provident with a short position of Unit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prairie Provident and Unit.

Diversification Opportunities for Prairie Provident and Unit

-0.24

Correlation Coefficient

Prairie Provident  Unit

Very good diversification

The 3 months correlation between Prairie and Unit is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Prairie Provident Resources and Unit Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unit and Prairie Provident 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 Prairie Provident Resources are associated (or correlated) with Unit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unit has no effect on the direction of Prairie Provident i.e., Prairie Provident and Unit go up and down completely randomly.

Pair Corralation between Prairie Provident and Unit

Assuming the 90 days horizon Prairie Provident Resources is expected to under-perform the Unit. In addition to that, Prairie Provident is 2.56 times more volatile than Unit Corporation. It trades about 0.0 of its total potential returns per unit of risk. Unit Corporation is currently generating about 0.18 per unit of volatility. If you would invest  2,536  in Unit Corporation on July 1, 2025 and sell it today you would earn a total of  554.00  from holding Unit Corporation or generate 21.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Prairie Provident Resources  vs.  Unit Corp.

Prairie Provident

Risk-Adjusted Performance

Weakest

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

Unit

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Unit Corporation are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Unit exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Prairie Provident and Unit

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

The idea behind Prairie Provident Resources and Unit Corporation 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.