Correlation Between Patterson UTI and Chemours
Can any of the company-specific risk be diversified away by investing in both Patterson UTI and Chemours 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 Chemours 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 Chemours Co, you can compare the effects of market volatilities on Patterson UTI and Chemours 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 Chemours. Check out your portfolio center. Please also check ongoing floating volatility patterns of Patterson UTI and Chemours.
Diversification Opportunities for Patterson UTI and Chemours
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Patterson and Chemours is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Patterson UTI Energy and Chemours Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chemours 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 Chemours. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chemours has no effect on the direction of Patterson UTI i.e., Patterson UTI and Chemours go up and down completely randomly.
Pair Corralation between Patterson UTI and Chemours
Given the investment horizon of 90 days Patterson UTI is expected to generate 2.21 times less return on investment than Chemours. But when comparing it to its historical volatility, Patterson UTI Energy is 1.26 times less risky than Chemours. It trades about 0.13 of its potential returns per unit of risk. Chemours Co is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 1,805 in Chemours Co on August 30, 2024 and sell it today you would earn a total of 377.00 from holding Chemours Co or generate 20.89% 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. Chemours Co
Performance |
| Timeline |
| Patterson UTI Energy |
| Chemours |
Patterson UTI and Chemours Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Patterson UTI and Chemours
The main advantage of trading using opposite Patterson UTI and Chemours positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Patterson UTI position performs unexpectedly, Chemours 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 Chemours will offset losses from the drop in Chemours' 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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