Correlation Between Patterson UTI and NCR Corp

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

Diversification Opportunities for Patterson UTI and NCR Corp

-0.01

Correlation Coefficient

Patterson UTI  NCR Corp

Good diversification

The 3 months correlation between Patterson and NCR is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Patterson UTI Energy and NCR Corp Pref in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NCR Corp Pref 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 NCR Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NCR Corp Pref has no effect on the direction of Patterson UTI i.e., Patterson UTI and NCR Corp go up and down completely randomly.

Pair Corralation between Patterson UTI and NCR Corp

Given the investment horizon of 90 days Patterson UTI Energy is expected to under-perform the NCR Corp. In addition to that, Patterson UTI is 1.26 times more volatile than NCR Corp Pref. It trades about -0.04 of its total potential returns per unit of risk. NCR Corp Pref is currently generating about 0.06 per unit of volatility. If you would invest  81,472  in NCR Corp Pref on September 26, 2024 and sell it today you would earn a total of  35,653  from holding NCR Corp Pref or generate 43.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	58.47%
Values	Daily Returns

Patterson UTI Energy  vs.  NCR Corp Pref

Patterson UTI Energy

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Patterson UTI Energy are ranked lower than 2 (%) 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.

NCR Corp Pref

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NCR Corp Pref has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, NCR Corp is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Patterson UTI and NCR Corp

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

The idea behind Patterson UTI Energy and NCR Corp Pref 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.