Correlation Between Independence Contract and Patterson UTI
Can any of the company-specific risk be diversified away by investing in both Independence Contract 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 Independence Contract and Patterson UTI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Independence Contract Drilling and Patterson UTI Energy, you can compare the effects of market volatilities on Independence Contract 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 Independence Contract with a short position of Patterson UTI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Independence Contract and Patterson UTI.
Diversification Opportunities for Independence Contract and Patterson UTI
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Independence and Patterson is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Independence Contract Drilling 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 Independence Contract 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 Independence Contract Drilling 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 Independence Contract i.e., Independence Contract and Patterson UTI go up and down completely randomly.
Pair Corralation between Independence Contract and Patterson UTI
Considering the 90-day investment horizon Independence Contract Drilling is expected to under-perform the Patterson UTI. In addition to that, Independence Contract is 2.72 times more volatile than Patterson UTI Energy. It trades about -0.11 of its total potential returns per unit of risk. Patterson UTI Energy is currently generating about -0.01 per unit of volatility. If you would invest 1,011 in Patterson UTI Energy on August 29, 2024 and sell it today you would lose (177.00) from holding Patterson UTI Energy or give up 17.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 84.48% |
| Values | Daily Returns |
Independence Contract Drilling vs. Patterson UTI Energy
Performance |
| Timeline |
| Independence Contract |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Patterson UTI Energy |
Independence Contract and Patterson UTI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Independence Contract and Patterson UTI
The main advantage of trading using opposite Independence Contract and Patterson UTI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Independence Contract 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.| Independence Contract vs. Forum Energy Technologies | Independence Contract vs. KLX Energy Services | Independence Contract vs. Mammoth Energy Services | Independence Contract vs. Borr Drilling |
| 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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