Correlation Between Park Hotels and Patterson UTI
Can any of the company-specific risk be diversified away by investing in both Park Hotels 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 Park Hotels and Patterson UTI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Park Hotels Resorts and Patterson UTI Energy, you can compare the effects of market volatilities on Park Hotels 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 Park Hotels with a short position of Patterson UTI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Park Hotels and Patterson UTI.
Diversification Opportunities for Park Hotels and Patterson UTI
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Park and Patterson is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Park Hotels Resorts 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 Park Hotels 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 Park Hotels Resorts 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 Park Hotels i.e., Park Hotels and Patterson UTI go up and down completely randomly.
Pair Corralation between Park Hotels and Patterson UTI
Allowing for the 90-day total investment horizon Park Hotels Resorts is expected to generate 0.69 times more return on investment than Patterson UTI. However, Park Hotels Resorts is 1.45 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 -0.02 per unit of risk. If you would invest 1,287 in Park Hotels Resorts on September 2, 2024 and sell it today you would earn a total of 268.00 from holding Park Hotels Resorts or generate 20.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Park Hotels Resorts vs. Patterson UTI Energy
Performance |
| Timeline |
| Park Hotels Resorts |
| Patterson UTI Energy |
Park Hotels and Patterson UTI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Park Hotels and Patterson UTI
The main advantage of trading using opposite Park Hotels and Patterson UTI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Park Hotels 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.| Park Hotels vs. Ryman Hospitality Properties | Park Hotels vs. Service Properties Trust | Park Hotels vs. RLJ Lodging Trust |
| 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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