Correlation Between Patterson UTI and Seadrill
Can any of the company-specific risk be diversified away by investing in both Patterson UTI and Seadrill 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 Seadrill 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 Seadrill Limited, you can compare the effects of market volatilities on Patterson UTI and Seadrill 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 Seadrill. Check out your portfolio center. Please also check ongoing floating volatility patterns of Patterson UTI and Seadrill.
Diversification Opportunities for Patterson UTI and Seadrill
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Patterson and Seadrill is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Patterson UTI Energy and Seadrill Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seadrill Limited 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 Seadrill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seadrill Limited has no effect on the direction of Patterson UTI i.e., Patterson UTI and Seadrill go up and down completely randomly.
Pair Corralation between Patterson UTI and Seadrill
Given the investment horizon of 90 days Patterson UTI Energy is expected to generate 1.14 times more return on investment than Seadrill. However, Patterson UTI is 1.14 times more volatile than Seadrill Limited. It trades about 0.0 of its potential returns per unit of risk. Seadrill Limited is currently generating about -0.04 per unit of risk. If you would invest 865.00 in Patterson UTI Energy on November 2, 2024 and sell it today you would lose (41.00) from holding Patterson UTI Energy or give up 4.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Patterson UTI Energy vs. Seadrill Limited
Performance |
| Timeline |
| Patterson UTI Energy |
| Seadrill Limited |
Patterson UTI and Seadrill Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Patterson UTI and Seadrill
The main advantage of trading using opposite Patterson UTI and Seadrill positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Patterson UTI position performs unexpectedly, Seadrill 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 Seadrill will offset losses from the drop in Seadrill's long position.| Patterson UTI vs. Nabors Industries | Patterson UTI vs. Precision Drilling | Patterson UTI vs. Noble plc | Patterson UTI vs. Helmerich and Payne |
| Seadrill vs. Nabors Industries | Seadrill vs. Borr Drilling | Seadrill vs. Patterson UTI Energy | Seadrill vs. Noble plc |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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