Correlation Between SBM Offshore and Patterson UTI
Can any of the company-specific risk be diversified away by investing in both SBM Offshore 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 SBM Offshore and Patterson UTI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SBM Offshore NV and Patterson UTI Energy, you can compare the effects of market volatilities on SBM Offshore 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 SBM Offshore with a short position of Patterson UTI. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBM Offshore and Patterson UTI.
Diversification Opportunities for SBM Offshore and Patterson UTI
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between SBM and Patterson is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding SBM Offshore NV 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 SBM Offshore 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 SBM Offshore NV 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 SBM Offshore i.e., SBM Offshore and Patterson UTI go up and down completely randomly.
Pair Corralation between SBM Offshore and Patterson UTI
Assuming the 90 days horizon SBM Offshore NV is expected to generate 0.89 times more return on investment than Patterson UTI. However, SBM Offshore NV is 1.12 times less risky than Patterson UTI. It trades about 0.11 of its potential returns per unit of risk. Patterson UTI Energy is currently generating about -0.03 per unit of risk. If you would invest 1,211 in SBM Offshore NV on August 26, 2024 and sell it today you would earn a total of 669.00 from holding SBM Offshore NV or generate 55.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 75.5% |
| Values | Daily Returns |
SBM Offshore NV vs. Patterson UTI Energy
Performance |
| Timeline |
| SBM Offshore NV |
| Patterson UTI Energy |
SBM Offshore and Patterson UTI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBM Offshore and Patterson UTI
The main advantage of trading using opposite SBM Offshore and Patterson UTI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBM Offshore 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.| SBM Offshore vs. Expro Group Holdings | SBM Offshore vs. ChampionX | SBM Offshore vs. Ranger Energy Services | SBM Offshore vs. Cactus Inc |
| 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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