Correlation Between US Silica and Solaris Oilfield

Can any of the company-specific risk be diversified away by investing in both US Silica and Solaris Oilfield 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 US Silica and Solaris Oilfield into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between US Silica Holdings and Solaris Oilfield Infrastructure, you can compare the effects of market volatilities on US Silica and Solaris Oilfield 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 US Silica with a short position of Solaris Oilfield. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Silica and Solaris Oilfield.

Diversification Opportunities for US Silica and Solaris Oilfield

-0.59

Correlation Coefficient

US Silica  Solaris Oilfield

Excellent diversification

The 3 months correlation between SLCA and Solaris is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding US Silica Holdings and Solaris Oilfield Infrastructur in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solaris Oilfield Inf and US Silica 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 US Silica Holdings are associated (or correlated) with Solaris Oilfield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solaris Oilfield Inf has no effect on the direction of US Silica i.e., US Silica and Solaris Oilfield go up and down completely randomly.

Pair Corralation between US Silica and Solaris Oilfield

If you would invest (100.00) in US Silica Holdings on August 31, 2024 and sell it today you would earn a total of  100.00  from holding US Silica Holdings or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	0.0%
Values	Daily Returns

US Silica Holdings  vs.  Solaris Oilfield Infrastructur

US Silica Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days US Silica Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, US Silica is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Solaris Oilfield Inf

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Solaris Oilfield Infrastructure has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in December 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with US Silica and Solaris Oilfield

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

The idea behind US Silica Holdings and Solaris Oilfield Infrastructure 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.