Correlation Between Patterson UTI and Cheniere Energy
Can any of the company-specific risk be diversified away by investing in both Patterson UTI and Cheniere 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 Cheniere 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 Cheniere Energy Partners, you can compare the effects of market volatilities on Patterson UTI and Cheniere 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 Cheniere Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Patterson UTI and Cheniere Energy.
Diversification Opportunities for Patterson UTI and Cheniere Energy
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Patterson and Cheniere is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Patterson UTI Energy and Cheniere Energy Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cheniere Energy Partners 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 Cheniere Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cheniere Energy Partners has no effect on the direction of Patterson UTI i.e., Patterson UTI and Cheniere Energy go up and down completely randomly.
Pair Corralation between Patterson UTI and Cheniere Energy
Given the investment horizon of 90 days Patterson UTI is expected to generate 1.61 times less return on investment than Cheniere Energy. In addition to that, Patterson UTI is 2.22 times more volatile than Cheniere Energy Partners. It trades about 0.15 of its total potential returns per unit of risk. Cheniere Energy Partners is currently generating about 0.52 per unit of volatility. If you would invest 4,973 in Cheniere Energy Partners on September 1, 2024 and sell it today you would earn a total of 869.00 from holding Cheniere Energy Partners or generate 17.47% 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. Cheniere Energy Partners
Performance |
| Timeline |
| Patterson UTI Energy |
| Cheniere Energy Partners |
Patterson UTI and Cheniere Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Patterson UTI and Cheniere Energy
The main advantage of trading using opposite Patterson UTI and Cheniere Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Patterson UTI position performs unexpectedly, Cheniere 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 Cheniere Energy will offset losses from the drop in Cheniere 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 |
| Cheniere Energy vs. Plains All American | Cheniere Energy vs. Hess Midstream Partners | Cheniere Energy vs. Plains GP Holdings | Cheniere Energy vs. Antero Midstream Partners |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
Other Complementary Tools
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas |