Correlation Between Tandy Leather and ProFrac Holding
Can any of the company-specific risk be diversified away by investing in both Tandy Leather 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 Tandy Leather and ProFrac Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tandy Leather Factory and ProFrac Holding Corp, you can compare the effects of market volatilities on Tandy Leather 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 Tandy Leather with a short position of ProFrac Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tandy Leather and ProFrac Holding.
Diversification Opportunities for Tandy Leather and ProFrac Holding
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Tandy and ProFrac is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Tandy Leather Factory 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 Tandy Leather 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 Tandy Leather Factory 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 Tandy Leather i.e., Tandy Leather and ProFrac Holding go up and down completely randomly.
Pair Corralation between Tandy Leather and ProFrac Holding
Considering the 90-day investment horizon Tandy Leather is expected to generate 5.51 times less return on investment than ProFrac Holding. But when comparing it to its historical volatility, Tandy Leather Factory is 3.09 times less risky than ProFrac Holding. It trades about 0.09 of its potential returns per unit of risk. ProFrac Holding Corp is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 453.00 in ProFrac Holding Corp on April 7, 2025 and sell it today you would earn a total of 291.00 from holding ProFrac Holding Corp or generate 64.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tandy Leather Factory vs. ProFrac Holding Corp
Performance |
| Timeline |
| Tandy Leather Factory |
| ProFrac Holding Corp |
Tandy Leather and ProFrac Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tandy Leather and ProFrac Holding
The main advantage of trading using opposite Tandy Leather and ProFrac Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tandy Leather 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.| Tandy Leather vs. Kulicke and Soffa | Tandy Leather vs. Titan International | Tandy Leather vs. CTS Corporation | Tandy Leather vs. Ternium SA ADR |
| ProFrac Holding vs. Luxfer Holdings PLC | ProFrac Holding vs. Alto Ingredients | ProFrac Holding vs. Diageo PLC ADR | ProFrac Holding vs. Vita Coco |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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