Correlation Between Patterson UTI and Trump Media

Can any of the company-specific risk be diversified away by investing in both Patterson UTI and Trump Media 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 Trump Media 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 Trump Media Technology, you can compare the effects of market volatilities on Patterson UTI and Trump Media 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 Trump Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Patterson UTI and Trump Media.

Diversification Opportunities for Patterson UTI and Trump Media

-0.14

Correlation Coefficient

Patterson UTI  Trump Media

Good diversification

The 3 months correlation between Patterson and Trump is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Patterson UTI Energy and Trump Media Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trump Media Technology 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 Trump Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trump Media Technology has no effect on the direction of Patterson UTI i.e., Patterson UTI and Trump Media go up and down completely randomly.

Pair Corralation between Patterson UTI and Trump Media

Given the investment horizon of 90 days Patterson UTI Energy is expected to under-perform the Trump Media. But the stock apears to be less risky and, when comparing its historical volatility, Patterson UTI Energy is 3.69 times less risky than Trump Media. The stock trades about -0.04 of its potential returns per unit of risk. The Trump Media Technology is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  2,315  in Trump Media Technology on September 14, 2024 and sell it today you would earn a total of  273.00  from holding Trump Media Technology or generate 11.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	37.17%
Values	Daily Returns

Patterson UTI Energy  vs.  Trump Media Technology

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 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.

Trump Media Technology

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Trump Media Technology are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Trump Media showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Patterson UTI and Trump Media

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

The idea behind Patterson UTI Energy and Trump Media Technology 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.