Correlation Between Lion One and Patterson UTI

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

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

Diversification Opportunities for Lion One and Patterson UTI

0.06

Correlation Coefficient

Lion One  Patterson UTI

Significant diversification

The 3 months correlation between Lion and Patterson is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Lion One Metals 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 Lion One 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 Lion One Metals 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 Lion One i.e., Lion One and Patterson UTI go up and down completely randomly.

Pair Corralation between Lion One and Patterson UTI

Assuming the 90 days horizon Lion One Metals is expected to under-perform the Patterson UTI. In addition to that, Lion One is 1.4 times more volatile than Patterson UTI Energy. It trades about -0.18 of its total potential returns per unit of risk. Patterson UTI Energy is currently generating about -0.08 per unit of volatility. If you would invest  805.00  in Patterson UTI Energy on September 21, 2024 and sell it today you would lose (44.50) from holding Patterson UTI Energy or give up 5.53% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Lion One Metals  vs.  Patterson UTI Energy

Lion One Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lion One Metals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's essential indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Patterson UTI Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Patterson UTI Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Lion One and Patterson UTI

The main advantage of trading using opposite Lion One and Patterson UTI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lion One 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 Lion One Metals 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.