Correlation Between VBI Vaccines and Patterson UTI

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

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

Diversification Opportunities for VBI Vaccines and Patterson UTI

0.01

Correlation Coefficient

VBI Vaccines  Patterson UTI

Significant diversification

The 3 months correlation between VBI and Patterson is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding VBI Vaccines 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 VBI Vaccines 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 VBI Vaccines 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 VBI Vaccines i.e., VBI Vaccines and Patterson UTI go up and down completely randomly.

Pair Corralation between VBI Vaccines and Patterson UTI

Assuming the 90 days horizon VBI Vaccines is expected to generate 10.32 times more return on investment than Patterson UTI. However, VBI Vaccines is 10.32 times more volatile than Patterson UTI Energy. It trades about 0.03 of its potential returns per unit of risk. Patterson UTI Energy is currently generating about -0.12 per unit of risk. If you would invest  0.08  in VBI Vaccines on September 28, 2024 and sell it today you would lose (0.03) from holding VBI Vaccines or give up 37.5% of portfolio value over 90 days.

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

VBI Vaccines  vs.  Patterson UTI Energy

VBI Vaccines

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VBI Vaccines has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

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.

Pair Trading with VBI Vaccines and Patterson UTI

The main advantage of trading using opposite VBI Vaccines and Patterson UTI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VBI Vaccines 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 VBI Vaccines 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.