Correlation Between ProPetro Holding and Forum Energy

Can any of the company-specific risk be diversified away by investing in both ProPetro Holding and Forum 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 ProPetro Holding and Forum Energy 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 Forum Energy Technologies, you can compare the effects of market volatilities on ProPetro Holding and Forum 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 ProPetro Holding with a short position of Forum Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProPetro Holding and Forum Energy.

Diversification Opportunities for ProPetro Holding and Forum Energy

0.57

Correlation Coefficient

ProPetro Holding  Forum Energy

Very weak diversification

The 3 months correlation between ProPetro and Forum is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding ProPetro Holding Corp and Forum Energy Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Forum Energy Technologies 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 Forum Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Forum Energy Technologies has no effect on the direction of ProPetro Holding i.e., ProPetro Holding and Forum Energy go up and down completely randomly.

Pair Corralation between ProPetro Holding and Forum Energy

Given the investment horizon of 90 days ProPetro Holding Corp is expected to generate 1.38 times more return on investment than Forum Energy. However, ProPetro Holding is 1.38 times more volatile than Forum Energy Technologies. It trades about 0.1 of its potential returns per unit of risk. Forum Energy Technologies is currently generating about -0.14 per unit of risk. If you would invest  758.00  in ProPetro Holding Corp on July 4, 2024 and sell it today you would earn a total of  40.00  from holding ProPetro Holding Corp or generate 5.28% return on investment over 90 days.

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

ProPetro Holding Corp  vs.  Forum Energy Technologies

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 relatively invariable primary indicators, ProPetro Holding is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Forum Energy Technologies

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Forum Energy Technologies are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Forum Energy is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with ProPetro Holding and Forum Energy

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

The idea behind ProPetro Holding Corp and Forum Energy Technologies 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.