Correlation Between Patterson UTI and Lion One
Can any of the company-specific risk be diversified away by investing in both Patterson UTI and Lion One 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 Lion One 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 Lion One Metals, you can compare the effects of market volatilities on Patterson UTI and Lion One 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 Lion One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Patterson UTI and Lion One.
Diversification Opportunities for Patterson UTI and Lion One
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Patterson and Lion is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Patterson UTI Energy and Lion One Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lion One Metals 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 Lion One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lion One Metals has no effect on the direction of Patterson UTI i.e., Patterson UTI and Lion One go up and down completely randomly.
Pair Corralation between Patterson UTI and Lion One
Given the investment horizon of 90 days Patterson UTI Energy is expected to generate 0.72 times more return on investment than Lion One. However, Patterson UTI Energy is 1.38 times less risky than Lion One. It trades about -0.03 of its potential returns per unit of risk. Lion One Metals is currently generating about -0.04 per unit of risk. If you would invest 1,509 in Patterson UTI Energy on September 12, 2024 and sell it today you would lose (725.00) from holding Patterson UTI Energy or give up 48.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Patterson UTI Energy vs. Lion One Metals
Performance |
| Timeline |
| Patterson UTI Energy |
| Lion One Metals |
Patterson UTI and Lion One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Patterson UTI and Lion One
The main advantage of trading using opposite Patterson UTI and Lion One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Patterson UTI position performs unexpectedly, Lion One 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 Lion One will offset losses from the drop in Lion One's long position.| Patterson UTI vs. Nabors Industries | Patterson UTI vs. Borr Drilling | Patterson UTI vs. Transocean | Patterson UTI vs. Helmerich and Payne |
| Lion One vs. Advantage Solutions | Lion One vs. Atlas Corp | Lion One vs. PureCycle Technologies | Lion One vs. WM Technology |
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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