Correlation Between North American and ProFrac Holding
Can any of the company-specific risk be diversified away by investing in both North American 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 North American and ProFrac Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between North American Construction and ProFrac Holding Corp, you can compare the effects of market volatilities on North American 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 North American with a short position of ProFrac Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of North American and ProFrac Holding.
Diversification Opportunities for North American and ProFrac Holding
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between North and ProFrac is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding North American Construction 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 North American 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 North American Construction 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 North American i.e., North American and ProFrac Holding go up and down completely randomly.
Pair Corralation between North American and ProFrac Holding
Considering the 90-day investment horizon North American Construction is expected to generate 0.52 times more return on investment than ProFrac Holding. However, North American Construction is 1.92 times less risky than ProFrac Holding. It trades about -0.11 of its potential returns per unit of risk. ProFrac Holding Corp is currently generating about -0.15 per unit of risk. If you would invest 1,785 in North American Construction on June 7, 2025 and sell it today you would lose (448.00) from holding North American Construction or give up 25.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
North American Construction vs. ProFrac Holding Corp
Performance |
| Timeline |
| North American Const |
| ProFrac Holding Corp |
North American and ProFrac Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with North American and ProFrac Holding
The main advantage of trading using opposite North American and ProFrac Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if North American 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.| North American vs. Enerflex | North American vs. MRC Global | North American vs. NPK International | North American vs. Innovex International, |
| ProFrac Holding vs. Flotek Industries | ProFrac Holding vs. ProPetro Holding Corp | ProFrac Holding vs. Liberty Oilfield Services | ProFrac Holding vs. KLX Energy Services |
Check out your portfolio center.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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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