Correlation Between Helmerich and Patterson UTI

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

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

Diversification Opportunities for Helmerich and Patterson UTI

0.81

Correlation Coefficient

Helmerich  Patterson UTI

Very poor diversification

The 3 months correlation between Helmerich and Patterson is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Helmerich and Payne 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 Helmerich 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 Helmerich and Payne 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 Helmerich i.e., Helmerich and Patterson UTI go up and down completely randomly.

Pair Corralation between Helmerich and Patterson UTI

Allowing for the 90-day total investment horizon Helmerich and Payne is expected to generate 0.73 times more return on investment than Patterson UTI. However, Helmerich and Payne is 1.37 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 -0.06 per unit of risk. If you would invest  4,212  in Helmerich and Payne on January 25, 2024 and sell it today you would earn a total of  31.00  from holding Helmerich and Payne or generate 0.74% return on investment over 90 days.

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

Helmerich and Payne  vs.  Patterson UTI Energy

Helmerich and Payne

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Helmerich and Payne are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Helmerich reported solid returns over the last few months and may actually be approaching a breakup point.

Patterson UTI Energy

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Patterson UTI Energy are ranked lower than 5 (%) 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 May 2024.

Pair Trading with Helmerich and Patterson UTI

The main advantage of trading using opposite Helmerich and Patterson UTI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Helmerich 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 Helmerich and Payne 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.