Correlation Between Funko and Patterson UTI
Can any of the company-specific risk be diversified away by investing in both Funko and Patterson UTI 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 Funko and Patterson UTI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Funko Inc and Patterson UTI Energy, you can compare the effects of market volatilities on Funko and Patterson UTI 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 Funko with a short position of Patterson UTI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Funko and Patterson UTI.
Diversification Opportunities for Funko and Patterson UTI
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Funko and Patterson is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Funko Inc and Patterson UTI Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Patterson UTI Energy and Funko 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 Funko Inc are associated (or correlated) with Patterson UTI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Patterson UTI Energy has no effect on the direction of Funko i.e., Funko and Patterson UTI go up and down completely randomly.
Pair Corralation between Funko and Patterson UTI
Given the investment horizon of 90 days Funko is expected to generate 3.3 times less return on investment than Patterson UTI. In addition to that, Funko is 1.09 times more volatile than Patterson UTI Energy. It trades about 0.05 of its total potential returns per unit of risk. Patterson UTI Energy is currently generating about 0.17 per unit of volatility. If you would invest 761.00 in Patterson UTI Energy on September 3, 2024 and sell it today you would earn a total of 79.00 from holding Patterson UTI Energy or generate 10.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Funko Inc vs. Patterson UTI Energy
Performance |
| Timeline |
| Funko Inc |
| Patterson UTI Energy |
Funko and Patterson UTI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Funko and Patterson UTI
The main advantage of trading using opposite Funko and Patterson UTI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Funko position performs unexpectedly, Patterson UTI 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 Patterson UTI will offset losses from the drop in Patterson UTI's long position.The idea behind Funko Inc and Patterson UTI Energy 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.| Patterson UTI vs. Nabors Industries | Patterson UTI vs. Precision Drilling | Patterson UTI vs. Noble plc | Patterson UTI vs. Helmerich and Payne |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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