Correlation Between Patterson UTI and Rivian Automotive
Can any of the company-specific risk be diversified away by investing in both Patterson UTI and Rivian Automotive 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 Rivian Automotive 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 Rivian Automotive, you can compare the effects of market volatilities on Patterson UTI and Rivian Automotive 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 Rivian Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Patterson UTI and Rivian Automotive.
Diversification Opportunities for Patterson UTI and Rivian Automotive
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Patterson and Rivian is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Patterson UTI Energy and Rivian Automotive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rivian Automotive 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 Rivian Automotive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rivian Automotive has no effect on the direction of Patterson UTI i.e., Patterson UTI and Rivian Automotive go up and down completely randomly.
Pair Corralation between Patterson UTI and Rivian Automotive
Given the investment horizon of 90 days Patterson UTI Energy is expected to under-perform the Rivian Automotive. But the stock apears to be less risky and, when comparing its historical volatility, Patterson UTI Energy is 1.72 times less risky than Rivian Automotive. The stock trades about -0.05 of its potential returns per unit of risk. The Rivian Automotive is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,088 in Rivian Automotive on September 12, 2024 and sell it today you would earn a total of 318.00 from holding Rivian Automotive or generate 29.23% 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. Rivian Automotive
Performance |
| Timeline |
| Patterson UTI Energy |
| Rivian Automotive |
Patterson UTI and Rivian Automotive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Patterson UTI and Rivian Automotive
The main advantage of trading using opposite Patterson UTI and Rivian Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Patterson UTI position performs unexpectedly, Rivian Automotive 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 Rivian Automotive will offset losses from the drop in Rivian Automotive's long position.| Patterson UTI vs. Nabors Industries | Patterson UTI vs. Borr Drilling | Patterson UTI vs. Transocean | Patterson UTI vs. Helmerich and Payne |
| Rivian Automotive vs. Nio Class A | Rivian Automotive vs. Xpeng Inc | Rivian Automotive vs. Tesla Inc | Rivian Automotive vs. Li Auto |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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