Correlation Between Nasdaq and Patterson UTI

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

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

Diversification Opportunities for Nasdaq and Patterson UTI

0.13

Correlation Coefficient

Nasdaq  Patterson UTI

Average diversification

The 3 months correlation between Nasdaq and Patterson is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc 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 Nasdaq 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 Nasdaq Inc 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 Nasdaq i.e., Nasdaq and Patterson UTI go up and down completely randomly.

Pair Corralation between Nasdaq and Patterson UTI

Given the investment horizon of 90 days Nasdaq is expected to generate 1.69 times less return on investment than Patterson UTI. But when comparing it to its historical volatility, Nasdaq Inc is 2.3 times less risky than Patterson UTI. It trades about 0.03 of its potential returns per unit of risk. Patterson UTI Energy is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  819.00  in Patterson UTI Energy on December 4, 2024 and sell it today you would earn a total of  12.00  from holding Patterson UTI Energy or generate 1.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Nasdaq Inc  vs.  Patterson UTI Energy

Nasdaq Inc

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Nasdaq is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Patterson UTI Energy

Risk-Adjusted Performance

Very 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 Nasdaq and Patterson UTI

The main advantage of trading using opposite Nasdaq and Patterson UTI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq 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 Nasdaq Inc 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.