Correlation Between Patterson UTI and TKO Group
Can any of the company-specific risk be diversified away by investing in both Patterson UTI and TKO Group 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 TKO Group 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 TKO Group Holdings,, you can compare the effects of market volatilities on Patterson UTI and TKO Group 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 TKO Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Patterson UTI and TKO Group.
Diversification Opportunities for Patterson UTI and TKO Group
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Patterson and TKO is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Patterson UTI Energy and TKO Group Holdings, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TKO Group Holdings, 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 TKO Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TKO Group Holdings, has no effect on the direction of Patterson UTI i.e., Patterson UTI and TKO Group go up and down completely randomly.
Pair Corralation between Patterson UTI and TKO Group
Given the investment horizon of 90 days Patterson UTI is expected to generate 1.12 times less return on investment than TKO Group. In addition to that, Patterson UTI is 1.76 times more volatile than TKO Group Holdings,. It trades about 0.2 of its total potential returns per unit of risk. TKO Group Holdings, is currently generating about 0.39 per unit of volatility. If you would invest 11,907 in TKO Group Holdings, on September 2, 2024 and sell it today you would earn a total of 1,889 from holding TKO Group Holdings, or generate 15.86% 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. TKO Group Holdings,
Performance |
| Timeline |
| Patterson UTI Energy |
| TKO Group Holdings, |
Patterson UTI and TKO Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Patterson UTI and TKO Group
The main advantage of trading using opposite Patterson UTI and TKO Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Patterson UTI position performs unexpectedly, TKO Group 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 TKO Group will offset losses from the drop in TKO Group's long position.| Patterson UTI vs. Nabors Industries | Patterson UTI vs. Precision Drilling | Patterson UTI vs. Noble plc | Patterson UTI vs. Helmerich and Payne |
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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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