Correlation Between USWE SPORTS and Patterson-UTI Energy
Can any of the company-specific risk be diversified away by investing in both USWE SPORTS and Patterson-UTI Energy 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 USWE SPORTS and Patterson-UTI Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between USWE SPORTS AB and Patterson UTI Energy, you can compare the effects of market volatilities on USWE SPORTS and Patterson-UTI Energy 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 USWE SPORTS with a short position of Patterson-UTI Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of USWE SPORTS and Patterson-UTI Energy.
Diversification Opportunities for USWE SPORTS and Patterson-UTI Energy
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between USWE and Patterson-UTI is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding USWE SPORTS AB 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 USWE SPORTS 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 USWE SPORTS AB are associated (or correlated) with Patterson-UTI Energy. 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 USWE SPORTS i.e., USWE SPORTS and Patterson-UTI Energy go up and down completely randomly.
Pair Corralation between USWE SPORTS and Patterson-UTI Energy
Assuming the 90 days horizon USWE SPORTS is expected to generate 3.54 times less return on investment than Patterson-UTI Energy. But when comparing it to its historical volatility, USWE SPORTS AB is 1.53 times less risky than Patterson-UTI Energy. It trades about 0.02 of its potential returns per unit of risk. Patterson UTI Energy is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 733.00 in Patterson UTI Energy on December 29, 2024 and sell it today you would earn a total of 52.00 from holding Patterson UTI Energy or generate 7.09% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
USWE SPORTS AB vs. Patterson UTI Energy
Performance |
Timeline |
USWE SPORTS AB |
Patterson UTI Energy |
USWE SPORTS and Patterson-UTI Energy Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with USWE SPORTS and Patterson-UTI Energy
The main advantage of trading using opposite USWE SPORTS and Patterson-UTI Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if USWE SPORTS position performs unexpectedly, Patterson-UTI Energy 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 Energy will offset losses from the drop in Patterson-UTI Energy's long position.USWE SPORTS vs. MHP Hotel AG | USWE SPORTS vs. Adtalem Global Education | USWE SPORTS vs. PPHE HOTEL GROUP | USWE SPORTS vs. STRAYER EDUCATION |
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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