Correlation Between Lion One and Patterson UTI
Can any of the company-specific risk be diversified away by investing in both Lion One 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 Lion One and Patterson UTI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lion One Metals and Patterson UTI Energy, you can compare the effects of market volatilities on Lion One 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 Lion One with a short position of Patterson UTI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lion One and Patterson UTI.
Diversification Opportunities for Lion One and Patterson UTI
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lion and Patterson is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Lion One Metals 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 Lion One 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 Lion One Metals 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 Lion One i.e., Lion One and Patterson UTI go up and down completely randomly.
Pair Corralation between Lion One and Patterson UTI
Assuming the 90 days horizon Lion One Metals is expected to under-perform the Patterson UTI. In addition to that, Lion One is 1.38 times more volatile than Patterson UTI Energy. It trades about -0.04 of its total potential returns per unit of risk. Patterson UTI Energy is currently generating about -0.03 per unit of volatility. If you would invest 1,509 in Patterson UTI Energy on September 12, 2024 and sell it today you would lose (725.00) from holding Patterson UTI Energy or give up 48.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Lion One Metals vs. Patterson UTI Energy
Performance |
| Timeline |
| Lion One Metals |
| Patterson UTI Energy |
Lion One and Patterson UTI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lion One and Patterson UTI
The main advantage of trading using opposite Lion One and Patterson UTI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lion One 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.| Lion One vs. Advantage Solutions | Lion One vs. Atlas Corp | Lion One vs. PureCycle Technologies | Lion One vs. WM Technology |
| Patterson UTI vs. Nabors Industries | Patterson UTI vs. Borr Drilling | Patterson UTI vs. Transocean | 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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