Correlation Between Patterson UTI and Enersys

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

Diversification Opportunities for Patterson UTI and Enersys

0.29

Correlation Coefficient

Patterson UTI  Enersys

Modest diversification

The 3 months correlation between Patterson and Enersys is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Patterson UTI Energy and Enersys in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enersys 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 Enersys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enersys has no effect on the direction of Patterson UTI i.e., Patterson UTI and Enersys go up and down completely randomly.

Pair Corralation between Patterson UTI and Enersys

Given the investment horizon of 90 days Patterson UTI Energy is expected to under-perform the Enersys. In addition to that, Patterson UTI is 1.49 times more volatile than Enersys. It trades about -0.04 of its total potential returns per unit of risk. Enersys is currently generating about 0.02 per unit of volatility. If you would invest  8,733  in Enersys on September 23, 2024 and sell it today you would earn a total of  513.00  from holding Enersys or generate 5.87% 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.  Enersys

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.

Enersys

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Enersys has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Enersys is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Patterson UTI and Enersys

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

The idea behind Patterson UTI Energy and Enersys 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.