Correlation Between Patterson UTI and Sphere Entertainment
Can any of the company-specific risk be diversified away by investing in both Patterson UTI and Sphere Entertainment 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 Sphere Entertainment 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 Sphere Entertainment Co, you can compare the effects of market volatilities on Patterson UTI and Sphere Entertainment 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 Sphere Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Patterson UTI and Sphere Entertainment.
Diversification Opportunities for Patterson UTI and Sphere Entertainment
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Patterson and Sphere is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Patterson UTI Energy and Sphere Entertainment Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sphere Entertainment 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 Sphere Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sphere Entertainment has no effect on the direction of Patterson UTI i.e., Patterson UTI and Sphere Entertainment go up and down completely randomly.
Pair Corralation between Patterson UTI and Sphere Entertainment
Given the investment horizon of 90 days Patterson UTI Energy is expected to under-perform the Sphere Entertainment. But the stock apears to be less risky and, when comparing its historical volatility, Patterson UTI Energy is 1.16 times less risky than Sphere Entertainment. The stock trades about -0.03 of its potential returns per unit of risk. The Sphere Entertainment Co is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2,005 in Sphere Entertainment Co on September 3, 2024 and sell it today you would earn a total of 2,110 from holding Sphere Entertainment Co or generate 105.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Patterson UTI Energy vs. Sphere Entertainment Co
Performance |
| Timeline |
| Patterson UTI Energy |
| Sphere Entertainment |
Patterson UTI and Sphere Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Patterson UTI and Sphere Entertainment
The main advantage of trading using opposite Patterson UTI and Sphere Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Patterson UTI position performs unexpectedly, Sphere Entertainment 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 Sphere Entertainment will offset losses from the drop in Sphere Entertainment's long position.| Patterson UTI vs. Nabors Industries | Patterson UTI vs. Precision Drilling | Patterson UTI vs. Noble plc | Patterson UTI vs. Helmerich and Payne |
| Sphere Entertainment vs. Rumble Inc | Sphere Entertainment vs. Constellation Brands Class | Sphere Entertainment vs. ServiceNow | Sphere Entertainment vs. Datadog |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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