Correlation Between Patterson UTI and Treasury Wine

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Patterson UTI and Treasury Wine 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 Treasury Wine 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 Treasury Wine Estates, you can compare the effects of market volatilities on Patterson UTI and Treasury Wine 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 Treasury Wine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Patterson UTI and Treasury Wine.

Diversification Opportunities for Patterson UTI and Treasury Wine

0.78
  Correlation Coefficient

Poor diversification

The 3 months correlation between Patterson and Treasury is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Patterson-UTI Energy and Treasury Wine Estates in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Treasury Wine Estates 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 Treasury Wine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Treasury Wine Estates has no effect on the direction of Patterson UTI i.e., Patterson UTI and Treasury Wine go up and down completely randomly.

Pair Corralation between Patterson UTI and Treasury Wine

Given the investment horizon of 90 days Patterson UTI is expected to generate 1.58 times less return on investment than Treasury Wine. But when comparing it to its historical volatility, Patterson UTI Energy is 1.01 times less risky than Treasury Wine. It trades about 0.12 of its potential returns per unit of risk. Treasury Wine Estates is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  730.00  in Treasury Wine Estates on December 29, 2023 and sell it today you would earn a total of  52.00  from holding Treasury Wine Estates or generate 7.12% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Patterson-UTI Energy  vs.  Treasury Wine Estates

 Performance 
       Timeline  
Patterson-UTI Energy 

Risk-Adjusted Performance

6 of 100

 
Low
 
High
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Patterson UTI Energy are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady technical and fundamental indicators, Patterson UTI displayed solid returns over the last few months and may actually be approaching a breakup point.
Treasury Wine Estates 

Risk-Adjusted Performance

5 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Treasury Wine Estates are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, Treasury Wine may actually be approaching a critical reversion point that can send shares even higher in April 2024.

Patterson UTI and Treasury Wine Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Patterson UTI and Treasury Wine

The main advantage of trading using opposite Patterson UTI and Treasury Wine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Patterson UTI position performs unexpectedly, Treasury Wine 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 Treasury Wine will offset losses from the drop in Treasury Wine's long position.
The idea behind Patterson UTI Energy and Treasury Wine Estates 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.
Check out your portfolio center.
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.

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