Correlation Between Patterson-UTI Energy and BORR DRILLING
Can any of the company-specific risk be diversified away by investing in both Patterson-UTI Energy and BORR DRILLING 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 Patterson-UTI Energy and BORR DRILLING into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Patterson UTI Energy and BORR DRILLING NEW, you can compare the effects of market volatilities on Patterson-UTI Energy and BORR DRILLING 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 Patterson-UTI Energy with a short position of BORR DRILLING. Check out your portfolio center. Please also check ongoing floating volatility patterns of Patterson-UTI Energy and BORR DRILLING.
Diversification Opportunities for Patterson-UTI Energy and BORR DRILLING
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Patterson-UTI and BORR is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Patterson UTI Energy and BORR DRILLING NEW in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BORR DRILLING NEW and Patterson-UTI Energy 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 Patterson UTI Energy are associated (or correlated) with BORR DRILLING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BORR DRILLING NEW has no effect on the direction of Patterson-UTI Energy i.e., Patterson-UTI Energy and BORR DRILLING go up and down completely randomly.
Pair Corralation between Patterson-UTI Energy and BORR DRILLING
Assuming the 90 days horizon Patterson UTI Energy is expected to generate 0.84 times more return on investment than BORR DRILLING. However, Patterson UTI Energy is 1.19 times less risky than BORR DRILLING. It trades about 0.01 of its potential returns per unit of risk. BORR DRILLING NEW is currently generating about -0.14 per unit of risk. If you would invest 810.00 in Patterson UTI Energy on September 3, 2024 and sell it today you would lose (10.00) from holding Patterson UTI Energy or give up 1.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Patterson UTI Energy vs. BORR DRILLING NEW
Performance |
| Timeline |
| Patterson UTI Energy |
| BORR DRILLING NEW |
Patterson-UTI Energy and BORR DRILLING Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Patterson-UTI Energy and BORR DRILLING
The main advantage of trading using opposite Patterson-UTI Energy and BORR DRILLING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Patterson-UTI Energy position performs unexpectedly, BORR DRILLING 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 BORR DRILLING will offset losses from the drop in BORR DRILLING's long position.| Patterson-UTI Energy vs. TOREX SEMICONDUCTOR LTD | Patterson-UTI Energy vs. Elmos Semiconductor SE | Patterson-UTI Energy vs. Laureate Education | Patterson-UTI Energy vs. Magnachip Semiconductor |
| BORR DRILLING vs. Patterson UTI Energy | BORR DRILLING vs. PRECISION DRILLING P | BORR DRILLING vs. SHELF DRILLING LTD | BORR DRILLING vs. Daldrup Shne Aktiengesellschaft |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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