Correlation Between ProPetro Holding and ProFrac Holding

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

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

Diversification Opportunities for ProPetro Holding and ProFrac Holding

0.79

Correlation Coefficient

ProPetro Holding  ProFrac Holding

Poor diversification

The 3 months correlation between ProPetro and ProFrac is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding ProPetro Holding Corp and ProFrac Holding Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProFrac Holding Corp and ProPetro Holding 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 ProPetro Holding Corp are associated (or correlated) with ProFrac Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProFrac Holding Corp has no effect on the direction of ProPetro Holding i.e., ProPetro Holding and ProFrac Holding go up and down completely randomly.

Pair Corralation between ProPetro Holding and ProFrac Holding

Given the investment horizon of 90 days ProPetro Holding Corp is expected to generate 0.52 times more return on investment than ProFrac Holding. However, ProPetro Holding Corp is 1.92 times less risky than ProFrac Holding. It trades about -0.06 of its potential returns per unit of risk. ProFrac Holding Corp is currently generating about -0.07 per unit of risk. If you would invest  562.00  in ProPetro Holding Corp on May 22, 2025 and sell it today you would lose (95.00) from holding ProPetro Holding Corp or give up 16.9% of portfolio value over 90 days.

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

ProPetro Holding Corp  vs.  ProFrac Holding Corp

ProPetro Holding Corp

Risk-Adjusted Performance

Weakest

Over the last 90 days ProPetro Holding Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with uncertain performance in the last few months, the Stock's primary indicators remain relatively invariable which may send shares a bit higher in September 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

ProFrac Holding Corp

Risk-Adjusted Performance

Weakest

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

Pair Trading with ProPetro Holding and ProFrac Holding

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

The idea behind ProPetro Holding Corp and ProFrac 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.