Correlation Between Patterson UTI and Cathedral Energy
Can any of the company-specific risk be diversified away by investing in both Patterson UTI and Cathedral 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 Cathedral 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 Cathedral Energy Services, you can compare the effects of market volatilities on Patterson UTI and Cathedral 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 Cathedral Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Patterson UTI and Cathedral Energy.
Diversification Opportunities for Patterson UTI and Cathedral Energy
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Patterson and Cathedral is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Patterson UTI Energy and Cathedral Energy Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cathedral Energy Services 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 Cathedral Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cathedral Energy Services has no effect on the direction of Patterson UTI i.e., Patterson UTI and Cathedral Energy go up and down completely randomly.
Pair Corralation between Patterson UTI and Cathedral Energy
Given the investment horizon of 90 days Patterson UTI Energy is expected to under-perform the Cathedral Energy. But the stock apears to be less risky and, when comparing its historical volatility, Patterson UTI Energy is 1.05 times less risky than Cathedral Energy. The stock trades about -0.01 of its potential returns per unit of risk. The Cathedral Energy Services is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 441.00 in Cathedral Energy Services on August 29, 2024 and sell it today you would earn a total of 11.00 from holding Cathedral Energy Services or generate 2.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Patterson UTI Energy vs. Cathedral Energy Services
Performance |
| Timeline |
| Patterson UTI Energy |
| Cathedral Energy Services |
Patterson UTI and Cathedral Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Patterson UTI and Cathedral Energy
The main advantage of trading using opposite Patterson UTI and Cathedral Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Patterson UTI position performs unexpectedly, Cathedral 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 Cathedral Energy will offset losses from the drop in Cathedral 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 |
| Cathedral Energy vs. Petroleo Brasileiro Petrobras | Cathedral Energy vs. Equinor ASA ADR | Cathedral Energy vs. Eni SpA ADR | Cathedral Energy vs. YPF Sociedad Anonima |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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