Correlation Between Patterson UTI and JD Sports
Can any of the company-specific risk be diversified away by investing in both Patterson UTI and JD Sports 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 JD Sports 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 JD Sports Fashion, you can compare the effects of market volatilities on Patterson UTI and JD Sports 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 JD Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Patterson UTI and JD Sports.
Diversification Opportunities for Patterson UTI and JD Sports
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Patterson and JDDSF is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Patterson UTI Energy and JD Sports Fashion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JD Sports Fashion 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 JD Sports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JD Sports Fashion has no effect on the direction of Patterson UTI i.e., Patterson UTI and JD Sports go up and down completely randomly.
Pair Corralation between Patterson UTI and JD Sports
Given the investment horizon of 90 days Patterson UTI Energy is expected to generate 0.81 times more return on investment than JD Sports. However, Patterson UTI Energy is 1.23 times less risky than JD Sports. It trades about 0.17 of its potential returns per unit of risk. JD Sports Fashion is currently generating about -0.22 per unit of risk. If you would invest 761.00 in Patterson UTI Energy on September 3, 2024 and sell it today you would earn a total of 79.00 from holding Patterson UTI Energy or generate 10.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Patterson UTI Energy vs. JD Sports Fashion
Performance |
| Timeline |
| Patterson UTI Energy |
| JD Sports Fashion |
Patterson UTI and JD Sports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Patterson UTI and JD Sports
The main advantage of trading using opposite Patterson UTI and JD Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Patterson UTI position performs unexpectedly, JD Sports 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 JD Sports will offset losses from the drop in JD Sports' long position.| Patterson UTI vs. Nabors Industries | Patterson UTI vs. Precision Drilling | Patterson UTI vs. Noble plc | Patterson UTI vs. Helmerich and Payne |
| JD Sports vs. Guess Inc | JD Sports vs. Foot Locker | JD Sports vs. JPMorgan Chase Co | JD Sports vs. Home Depot |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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