Correlation Between Bristow and ProFrac Holding

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

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

Diversification Opportunities for Bristow and ProFrac Holding

0.54

Correlation Coefficient

Bristow  ProFrac Holding

Very weak diversification

The 3 months correlation between Bristow and ProFrac is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Bristow Group 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 Bristow 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 Bristow Group 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 Bristow i.e., Bristow and ProFrac Holding go up and down completely randomly.

Pair Corralation between Bristow and ProFrac Holding

Given the investment horizon of 90 days Bristow Group is expected to under-perform the ProFrac Holding. But the stock apears to be less risky and, when comparing its historical volatility, Bristow Group is 1.93 times less risky than ProFrac Holding. The stock trades about -0.01 of its potential returns per unit of risk. The ProFrac Holding Corp is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  657.00  in ProFrac Holding Corp on September 2, 2024 and sell it today you would earn a total of  250.00  from holding ProFrac Holding Corp or generate 38.05% return on investment over 90 days.

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

Bristow Group  vs.  ProFrac Holding Corp

Bristow Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bristow Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Bristow is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

ProFrac Holding Corp

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ProFrac Holding Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, ProFrac Holding exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bristow and ProFrac Holding

The main advantage of trading using opposite Bristow and ProFrac Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bristow 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 Bristow Group 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.