Correlation Between Patterson UTI and Methode Electronics
Can any of the company-specific risk be diversified away by investing in both Patterson UTI and Methode Electronics 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 Methode Electronics 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 Methode Electronics, you can compare the effects of market volatilities on Patterson UTI and Methode Electronics 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 Methode Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Patterson UTI and Methode Electronics.
Diversification Opportunities for Patterson UTI and Methode Electronics
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Patterson and Methode is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Patterson UTI Energy and Methode Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Methode Electronics 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 Methode Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Methode Electronics has no effect on the direction of Patterson UTI i.e., Patterson UTI and Methode Electronics go up and down completely randomly.
Pair Corralation between Patterson UTI and Methode Electronics
Given the investment horizon of 90 days Patterson UTI Energy is expected to generate 0.65 times more return on investment than Methode Electronics. However, Patterson UTI Energy is 1.54 times less risky than Methode Electronics. It trades about 0.04 of its potential returns per unit of risk. Methode Electronics is currently generating about 0.02 per unit of risk. If you would invest 549.00 in Patterson UTI Energy on June 5, 2025 and sell it today you would earn a total of 24.00 from holding Patterson UTI Energy or generate 4.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Patterson UTI Energy vs. Methode Electronics
Performance |
| Timeline |
| Patterson UTI Energy |
| Methode Electronics |
Patterson UTI and Methode Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Patterson UTI and Methode Electronics
The main advantage of trading using opposite Patterson UTI and Methode Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Patterson UTI position performs unexpectedly, Methode Electronics 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 Methode Electronics will offset losses from the drop in Methode Electronics' long position.| Patterson UTI vs. Helmerich and Payne | Patterson UTI vs. Nabors Industries | Patterson UTI vs. Precision Drilling | Patterson UTI vs. Seadrill Limited |
| Methode Electronics vs. Mobilicom Limited American | Methode Electronics vs. Sonim Technologies | Methode Electronics vs. PowerFleet, | Methode Electronics vs. Moving iMage Technologies |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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