Correlation Between Flotek Industries and Ranger Energy

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

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

Diversification Opportunities for Flotek Industries and Ranger Energy

-0.07

Correlation Coefficient

Flotek Industries  Ranger Energy

Good diversification

The 3 months correlation between Flotek and Ranger is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Flotek Industries and Ranger Energy Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ranger Energy Services and Flotek Industries 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 Flotek Industries are associated (or correlated) with Ranger Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ranger Energy Services has no effect on the direction of Flotek Industries i.e., Flotek Industries and Ranger Energy go up and down completely randomly.

Pair Corralation between Flotek Industries and Ranger Energy

Considering the 90-day investment horizon Flotek Industries is expected to generate 2.02 times more return on investment than Ranger Energy. However, Flotek Industries is 2.02 times more volatile than Ranger Energy Services. It trades about 0.14 of its potential returns per unit of risk. Ranger Energy Services is currently generating about -0.18 per unit of risk. If you would invest  924.00  in Flotek Industries on February 18, 2025 and sell it today you would earn a total of  640.00  from holding Flotek Industries or generate 69.26% return on investment over 90 days.

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

Flotek Industries  vs.  Ranger Energy Services

Flotek Industries

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Flotek Industries are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Flotek Industries disclosed solid returns over the last few months and may actually be approaching a breakup point.

Ranger Energy Services

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ranger Energy Services has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's technical and fundamental indicators remain relatively invariable which may send shares a bit higher in June 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Flotek Industries and Ranger Energy

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

The idea behind Flotek Industries and Ranger Energy Services 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.