Correlation Between Boston Beer and Patterson UTI
Can any of the company-specific risk be diversified away by investing in both Boston Beer and Patterson UTI 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 Boston Beer and Patterson UTI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Boston Beer and Patterson UTI Energy, you can compare the effects of market volatilities on Boston Beer and Patterson UTI 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 Boston Beer with a short position of Patterson UTI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Beer and Patterson UTI.
Diversification Opportunities for Boston Beer and Patterson UTI
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Boston and Patterson is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Boston Beer and Patterson UTI Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Patterson UTI Energy and Boston Beer 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 Boston Beer are associated (or correlated) with Patterson UTI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Patterson UTI Energy has no effect on the direction of Boston Beer i.e., Boston Beer and Patterson UTI go up and down completely randomly.
Pair Corralation between Boston Beer and Patterson UTI
Considering the 90-day investment horizon Boston Beer is expected to generate 1.21 times less return on investment than Patterson UTI. But when comparing it to its historical volatility, Boston Beer is 2.82 times less risky than Patterson UTI. It trades about 0.34 of its potential returns per unit of risk. Patterson UTI Energy is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 767.00 in Patterson UTI Energy on September 1, 2024 and sell it today you would earn a total of 73.00 from holding Patterson UTI Energy or generate 9.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Boston Beer vs. Patterson UTI Energy
Performance |
| Timeline |
| Boston Beer |
| Patterson UTI Energy |
Boston Beer and Patterson UTI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boston Beer and Patterson UTI
The main advantage of trading using opposite Boston Beer and Patterson UTI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boston Beer position performs unexpectedly, Patterson UTI 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 Patterson UTI will offset losses from the drop in Patterson UTI's long position.| Boston Beer vs. Anheuser Busch Inbev | Boston Beer vs. Molson Coors Beverage | Boston Beer vs. Heineken NV | Boston Beer vs. Ambev SA ADR |
| Patterson UTI vs. Nabors Industries | Patterson UTI vs. Precision Drilling | Patterson UTI vs. Noble plc | Patterson UTI vs. Helmerich and Payne |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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