Correlation Between Patterson-UTI Energy and PRECISION DRILLING
Can any of the company-specific risk be diversified away by investing in both Patterson-UTI Energy and PRECISION 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 PRECISION 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 PRECISION DRILLING P, you can compare the effects of market volatilities on Patterson-UTI Energy and PRECISION 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 PRECISION DRILLING. Check out your portfolio center. Please also check ongoing floating volatility patterns of Patterson-UTI Energy and PRECISION DRILLING.
Diversification Opportunities for Patterson-UTI Energy and PRECISION DRILLING
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Patterson-UTI and PRECISION is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Patterson UTI Energy and PRECISION DRILLING P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PRECISION DRILLING 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 PRECISION DRILLING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PRECISION DRILLING has no effect on the direction of Patterson-UTI Energy i.e., Patterson-UTI Energy and PRECISION DRILLING go up and down completely randomly.
Pair Corralation between Patterson-UTI Energy and PRECISION DRILLING
Assuming the 90 days horizon Patterson UTI Energy is expected to under-perform the PRECISION DRILLING. In addition to that, Patterson-UTI Energy is 1.13 times more volatile than PRECISION DRILLING P. It trades about -0.03 of its total potential returns per unit of risk. PRECISION DRILLING P is currently generating about 0.0 per unit of volatility. If you would invest 6,900 in PRECISION DRILLING P on August 31, 2024 and sell it today you would lose (1,050) from holding PRECISION DRILLING P or give up 15.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Patterson UTI Energy vs. PRECISION DRILLING P
Performance |
| Timeline |
| Patterson UTI Energy |
| PRECISION DRILLING |
Patterson-UTI Energy and PRECISION DRILLING Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Patterson-UTI Energy and PRECISION DRILLING
The main advantage of trading using opposite Patterson-UTI Energy and PRECISION DRILLING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Patterson-UTI Energy position performs unexpectedly, PRECISION 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 PRECISION DRILLING will offset losses from the drop in PRECISION DRILLING's long position.| Patterson-UTI Energy vs. PRECISION DRILLING P | Patterson-UTI Energy vs. SHELF DRILLING LTD | Patterson-UTI Energy vs. Daldrup Shne Aktiengesellschaft | Patterson-UTI Energy vs. Superior Plus Corp |
| PRECISION DRILLING vs. Air Transport Services | PRECISION DRILLING vs. GRIFFIN MINING LTD | PRECISION DRILLING vs. EVS Broadcast Equipment | PRECISION DRILLING vs. Coeur Mining |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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