Correlation Between Patterson UTI and Lincoln Educational
Can any of the company-specific risk be diversified away by investing in both Patterson UTI and Lincoln Educational 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 Lincoln Educational 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 Lincoln Educational Services, you can compare the effects of market volatilities on Patterson UTI and Lincoln Educational 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 Lincoln Educational. Check out your portfolio center. Please also check ongoing floating volatility patterns of Patterson UTI and Lincoln Educational.
Diversification Opportunities for Patterson UTI and Lincoln Educational
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Patterson and Lincoln is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Patterson UTI Energy and Lincoln Educational Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lincoln Educational 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 Lincoln Educational. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lincoln Educational has no effect on the direction of Patterson UTI i.e., Patterson UTI and Lincoln Educational go up and down completely randomly.
Pair Corralation between Patterson UTI and Lincoln Educational
Given the investment horizon of 90 days Patterson UTI Energy is expected to under-perform the Lincoln Educational. In addition to that, Patterson UTI is 1.04 times more volatile than Lincoln Educational Services. It trades about -0.02 of its total potential returns per unit of risk. Lincoln Educational Services is currently generating about 0.11 per unit of volatility. If you would invest 924.00 in Lincoln Educational Services on September 3, 2024 and sell it today you would earn a total of 719.00 from holding Lincoln Educational Services or generate 77.81% 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. Lincoln Educational Services
Performance |
| Timeline |
| Patterson UTI Energy |
| Lincoln Educational |
Patterson UTI and Lincoln Educational Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Patterson UTI and Lincoln Educational
The main advantage of trading using opposite Patterson UTI and Lincoln Educational positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Patterson UTI position performs unexpectedly, Lincoln Educational 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 Lincoln Educational will offset losses from the drop in Lincoln Educational's long position.| Patterson UTI vs. Nabors Industries | Patterson UTI vs. Precision Drilling | Patterson UTI vs. Noble plc | Patterson UTI vs. Helmerich and Payne |
| Lincoln Educational vs. Vasta Platform | Lincoln Educational vs. Laureate Education | Lincoln Educational vs. American Public Education | Lincoln Educational vs. Adtalem Global Education |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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