Correlation Between Atlas Energy and ProFrac Holding

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

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

Diversification Opportunities for Atlas Energy and ProFrac Holding

0.81

Correlation Coefficient

Atlas Energy  ProFrac Holding

Very poor diversification

The 3 months correlation between Atlas and ProFrac is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Atlas Energy Solutions 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 Atlas 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 Atlas Energy Solutions 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 Atlas Energy i.e., Atlas Energy and ProFrac Holding go up and down completely randomly.

Pair Corralation between Atlas Energy and ProFrac Holding

Given the investment horizon of 90 days Atlas Energy Solutions is expected to generate 0.49 times more return on investment than ProFrac Holding. However, Atlas Energy Solutions is 2.06 times less risky than ProFrac Holding. It trades about -0.05 of its potential returns per unit of risk. ProFrac Holding Corp is currently generating about -0.04 per unit of risk. If you would invest  2,234  in Atlas Energy Solutions on January 20, 2024 and sell it today you would lose (42.00) from holding Atlas Energy Solutions or give up 1.88% of portfolio value over 90 days.

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

Atlas Energy Solutions  vs.  ProFrac Holding Corp

Atlas Energy Solutions

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Atlas Energy Solutions are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Atlas Energy demonstrated solid returns over the last few months and may actually be approaching a breakup point.

ProFrac Holding Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ProFrac Holding Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, ProFrac Holding may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Atlas Energy and ProFrac Holding

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

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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.