Correlation Between Patterson UTI and Asbury Automotive
Can any of the company-specific risk be diversified away by investing in both Patterson UTI and Asbury Automotive 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 and Asbury Automotive 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 Asbury Automotive Group, you can compare the effects of market volatilities on Patterson UTI and Asbury Automotive 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 with a short position of Asbury Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Patterson UTI and Asbury Automotive.
Diversification Opportunities for Patterson UTI and Asbury Automotive
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Patterson and Asbury is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Patterson UTI Energy and Asbury Automotive Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asbury Automotive and Patterson UTI 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 Asbury Automotive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asbury Automotive has no effect on the direction of Patterson UTI i.e., Patterson UTI and Asbury Automotive go up and down completely randomly.
Pair Corralation between Patterson UTI and Asbury Automotive
Given the investment horizon of 90 days Patterson UTI is expected to generate 1.53 times less return on investment than Asbury Automotive. In addition to that, Patterson UTI is 1.38 times more volatile than Asbury Automotive Group. It trades about 0.11 of its total potential returns per unit of risk. Asbury Automotive Group is currently generating about 0.23 per unit of volatility. If you would invest 22,977 in Asbury Automotive Group on August 24, 2024 and sell it today you would earn a total of 2,839 from holding Asbury Automotive Group or generate 12.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Patterson UTI Energy vs. Asbury Automotive Group
Performance |
| Timeline |
| Patterson UTI Energy |
| Asbury Automotive |
Patterson UTI and Asbury Automotive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Patterson UTI and Asbury Automotive
The main advantage of trading using opposite Patterson UTI and Asbury Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Patterson UTI position performs unexpectedly, Asbury Automotive 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 Asbury Automotive will offset losses from the drop in Asbury Automotive's long position.| 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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