Correlation Between KLA Tencor and Patterson UTI
Can any of the company-specific risk be diversified away by investing in both KLA Tencor 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 KLA Tencor and Patterson UTI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KLA Tencor and Patterson UTI Energy, you can compare the effects of market volatilities on KLA Tencor 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 KLA Tencor with a short position of Patterson UTI. Check out your portfolio center. Please also check ongoing floating volatility patterns of KLA Tencor and Patterson UTI.
Diversification Opportunities for KLA Tencor and Patterson UTI
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between KLA and Patterson is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding KLA Tencor 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 KLA Tencor 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 KLA Tencor 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 KLA Tencor i.e., KLA Tencor and Patterson UTI go up and down completely randomly.
Pair Corralation between KLA Tencor and Patterson UTI
Given the investment horizon of 90 days KLA Tencor is expected to generate 0.95 times more return on investment than Patterson UTI. However, KLA Tencor is 1.05 times less risky than Patterson UTI. It trades about 0.05 of its potential returns per unit of risk. Patterson UTI Energy is currently generating about -0.01 per unit of risk. If you would invest 46,867 in KLA Tencor on September 2, 2024 and sell it today you would earn a total of 17,836 from holding KLA Tencor or generate 38.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KLA Tencor vs. Patterson UTI Energy
Performance |
| Timeline |
| KLA Tencor |
| Patterson UTI Energy |
KLA Tencor and Patterson UTI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KLA Tencor and Patterson UTI
The main advantage of trading using opposite KLA Tencor and Patterson UTI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KLA Tencor 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.| KLA Tencor vs. NXP Semiconductors NV | KLA Tencor vs. GSI Technology | KLA Tencor vs. MaxLinear | KLA Tencor vs. Texas Instruments Incorporated |
| 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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