Correlation Between Cannae Holdings and Patterson UTI

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

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

Diversification Opportunities for Cannae Holdings and Patterson UTI

0.27

Correlation Coefficient

Cannae Holdings  Patterson UTI

Modest diversification

The 3 months correlation between Cannae and Patterson is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Cannae Holdings 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 Cannae Holdings 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 Cannae Holdings 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 Cannae Holdings i.e., Cannae Holdings and Patterson UTI go up and down completely randomly.

Pair Corralation between Cannae Holdings and Patterson UTI

Given the investment horizon of 90 days Cannae Holdings is expected to under-perform the Patterson UTI. But the stock apears to be less risky and, when comparing its historical volatility, Cannae Holdings is 2.81 times less risky than Patterson UTI. The stock trades about -0.39 of its potential returns per unit of risk. The Patterson UTI Energy is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  826.00  in Patterson UTI Energy on September 27, 2024 and sell it today you would lose (48.00) from holding Patterson UTI Energy or give up 5.81% of portfolio value over 90 days.

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

Cannae Holdings  vs.  Patterson UTI Energy

Cannae Holdings

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cannae Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Cannae Holdings is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Patterson UTI Energy

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Patterson UTI Energy are ranked lower than 1 (%) 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.

Pair Trading with Cannae Holdings and Patterson UTI

The main advantage of trading using opposite Cannae Holdings and Patterson UTI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cannae Holdings 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 Cannae Holdings 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.