Correlation Between Ranger Energy and Trican Well

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

By analyzing existing cross correlation between Ranger Energy Services and Trican Well Service, you can compare the effects of market volatilities on Ranger Energy and Trican Well 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 Ranger Energy with a short position of Trican Well. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ranger Energy and Trican Well.

Diversification Opportunities for Ranger Energy and Trican Well

0.13

Correlation Coefficient

Ranger Energy  Trican Well

Average diversification

The 3 months correlation between Ranger and Trican is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Ranger Energy Services and Trican Well Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trican Well Service and Ranger Energy 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 Ranger Energy Services are associated (or correlated) with Trican Well. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trican Well Service has no effect on the direction of Ranger Energy i.e., Ranger Energy and Trican Well go up and down completely randomly.

Pair Corralation between Ranger Energy and Trican Well

Given the investment horizon of 90 days Ranger Energy Services is expected to generate 0.87 times more return on investment than Trican Well. However, Ranger Energy Services is 1.15 times less risky than Trican Well. It trades about 0.25 of its potential returns per unit of risk. Trican Well Service is currently generating about 0.04 per unit of risk. If you would invest  1,180  in Ranger Energy Services on September 13, 2024 and sell it today you would earn a total of  388.00  from holding Ranger Energy Services or generate 32.88% return on investment over 90 days.

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

Ranger Energy Services  vs.  Trican Well Service

Ranger Energy Services

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ranger Energy Services are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical and fundamental indicators, Ranger Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Trican Well Service

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Trican Well Service are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Trican Well is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Ranger Energy and Trican Well

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

The idea behind Ranger Energy Services and Trican Well Service 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..