Correlation Between Riley Exploration and ProFrac Holding

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

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

Diversification Opportunities for Riley Exploration and ProFrac Holding

-0.45

Correlation Coefficient

Riley Exploration  ProFrac Holding

Very good diversification

The 3 months correlation between Riley and ProFrac is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Riley Exploration Permian 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 Riley Exploration 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 Riley Exploration Permian 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 Riley Exploration i.e., Riley Exploration and ProFrac Holding go up and down completely randomly.

Pair Corralation between Riley Exploration and ProFrac Holding

Given the investment horizon of 90 days Riley Exploration Permian is expected to generate 0.34 times more return on investment than ProFrac Holding. However, Riley Exploration Permian is 2.98 times less risky than ProFrac Holding. It trades about 0.04 of its potential returns per unit of risk. ProFrac Holding Corp is currently generating about 0.0 per unit of risk. If you would invest  2,503  in Riley Exploration Permian on August 1, 2025 and sell it today you would earn a total of  104.00  from holding Riley Exploration Permian or generate 4.16% return on investment over 90 days.

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

Riley Exploration Permian  vs.  ProFrac Holding Corp

Riley Exploration Permian

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Riley Exploration Permian are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Riley Exploration is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the 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 rather sound fundamental indicators, ProFrac Holding is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Riley Exploration and ProFrac Holding

The main advantage of trading using opposite Riley Exploration and ProFrac Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Riley Exploration 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 Riley Exploration Permian 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.