Correlation Between Patterson UTI and Dana

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

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

Diversification Opportunities for Patterson UTI and Dana

0.22

Correlation Coefficient

Patterson UTI  Dana

Modest diversification

The 3 months correlation between Patterson and Dana is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Patterson UTI Energy and Dana Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dana Inc and Patterson UTI 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 Patterson UTI Energy are associated (or correlated) with Dana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dana Inc has no effect on the direction of Patterson UTI i.e., Patterson UTI and Dana go up and down completely randomly.

Pair Corralation between Patterson UTI and Dana

Given the investment horizon of 90 days Patterson UTI is expected to generate 2.45 times less return on investment than Dana. But when comparing it to its historical volatility, Patterson UTI Energy is 1.14 times less risky than Dana. It trades about 0.05 of its potential returns per unit of risk. Dana Inc is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1,139  in Dana Inc on December 28, 2024 and sell it today you would earn a total of  236.00  from holding Dana Inc or generate 20.72% return on investment over 90 days.

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

Patterson UTI Energy  vs.  Dana Inc

Patterson UTI Energy

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Patterson UTI Energy are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very weak technical and fundamental indicators, Patterson UTI may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Dana Inc

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Dana Inc are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Dana displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Patterson UTI and Dana

The main advantage of trading using opposite Patterson UTI and Dana positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Patterson UTI position performs unexpectedly, Dana 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 Dana will offset losses from the drop in Dana's long position.

The idea behind Patterson UTI Energy and Dana Inc 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.