Correlation Between Independence Contract and Patterson UTI

Can any of the company-specific risk be diversified away by investing in both Independence Contract 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 Independence Contract and Patterson UTI into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Independence Contract Drilling, and Patterson UTI Energy, you can compare the effects of market volatilities on Independence Contract 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 Independence Contract with a short position of Patterson UTI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Independence Contract and Patterson UTI.

Diversification Opportunities for Independence Contract and Patterson UTI

-0.32

Correlation Coefficient

Independence Contract  Patterson UTI

Very good diversification

The 3 months correlation between Independence and Patterson is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Independence Contract Drilling 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 Independence Contract 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 Independence Contract Drilling, 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 Independence Contract i.e., Independence Contract and Patterson UTI go up and down completely randomly.

Pair Corralation between Independence Contract and Patterson UTI

If you would invest  783.00  in Patterson UTI Energy on September 13, 2024 and sell it today you would earn a total of  1.00  from holding Patterson UTI Energy or generate 0.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.59%
Values	Daily Returns

Independence Contract Drilling  vs.  Patterson UTI Energy

Independence Contract

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Independence Contract Drilling, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental indicators, Independence Contract is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Patterson UTI Energy

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Patterson UTI Energy are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Patterson UTI is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Independence Contract and Patterson UTI

The main advantage of trading using opposite Independence Contract and Patterson UTI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Independence Contract 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.

The idea behind Independence Contract Drilling, and Patterson UTI Energy pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.