Correlation Between Patterson UTI and Alternus Energy
Can any of the company-specific risk be diversified away by investing in both Patterson UTI and Alternus Energy 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 Alternus Energy 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 Alternus Energy Group, you can compare the effects of market volatilities on Patterson UTI and Alternus Energy 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 Alternus Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Patterson UTI and Alternus Energy.
Diversification Opportunities for Patterson UTI and Alternus Energy
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Patterson and Alternus is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Patterson UTI Energy and Alternus Energy Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alternus Energy Group 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 Alternus Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alternus Energy Group has no effect on the direction of Patterson UTI i.e., Patterson UTI and Alternus Energy go up and down completely randomly.
Pair Corralation between Patterson UTI and Alternus Energy
Given the investment horizon of 90 days Patterson UTI Energy is expected to generate 0.45 times more return on investment than Alternus Energy. However, Patterson UTI Energy is 2.21 times less risky than Alternus Energy. It trades about -0.05 of its potential returns per unit of risk. Alternus Energy Group is currently generating about -0.24 per unit of risk. If you would invest 1,030 in Patterson UTI Energy on August 30, 2024 and sell it today you would lose (184.00) from holding Patterson UTI Energy or give up 17.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Patterson UTI Energy vs. Alternus Energy Group
Performance |
| Timeline |
| Patterson UTI Energy |
| Alternus Energy Group |
Patterson UTI and Alternus Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Patterson UTI and Alternus Energy
The main advantage of trading using opposite Patterson UTI and Alternus Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Patterson UTI position performs unexpectedly, Alternus Energy 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 Alternus Energy will offset losses from the drop in Alternus Energy's long position.| Patterson UTI vs. Nabors Industries | Patterson UTI vs. Precision Drilling | Patterson UTI vs. Noble plc | Patterson UTI vs. Helmerich and Payne |
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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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