Correlation Between Patterson UTI and Wabash National
Can any of the company-specific risk be diversified away by investing in both Patterson UTI and Wabash National 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 Wabash National 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 Wabash National, you can compare the effects of market volatilities on Patterson UTI and Wabash National 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 Wabash National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Patterson UTI and Wabash National.
Diversification Opportunities for Patterson UTI and Wabash National
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Patterson and Wabash is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Patterson UTI Energy and Wabash National in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wabash National 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 Wabash National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wabash National has no effect on the direction of Patterson UTI i.e., Patterson UTI and Wabash National go up and down completely randomly.
Pair Corralation between Patterson UTI and Wabash National
Given the investment horizon of 90 days Patterson UTI Energy is expected to under-perform the Wabash National. In addition to that, Patterson UTI is 1.29 times more volatile than Wabash National. It trades about -0.15 of its total potential returns per unit of risk. Wabash National is currently generating about 0.03 per unit of volatility. If you would invest 2,010 in Wabash National on September 12, 2024 and sell it today you would earn a total of 16.00 from holding Wabash National or generate 0.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Patterson UTI Energy vs. Wabash National
Performance |
| Timeline |
| Patterson UTI Energy |
| Wabash National |
Patterson UTI and Wabash National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Patterson UTI and Wabash National
The main advantage of trading using opposite Patterson UTI and Wabash National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Patterson UTI position performs unexpectedly, Wabash National 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 Wabash National will offset losses from the drop in Wabash National's long position.| Patterson UTI vs. Nabors Industries | Patterson UTI vs. Borr Drilling | Patterson UTI vs. Transocean | Patterson UTI vs. Helmerich and Payne |
| Wabash National vs. Manitowoc | Wabash National vs. Terex | Wabash National vs. Alamo Group | Wabash National vs. AGCO Corporation |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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