Correlation Between Kinsale Capital and Patterson UTI

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

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

Diversification Opportunities for Kinsale Capital and Patterson UTI

0.24

Correlation Coefficient

Kinsale Capital  Patterson UTI

Modest diversification

The 3 months correlation between Kinsale and Patterson is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Kinsale Capital Group 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 Kinsale Capital 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 Kinsale Capital Group 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 Kinsale Capital i.e., Kinsale Capital and Patterson UTI go up and down completely randomly.

Pair Corralation between Kinsale Capital and Patterson UTI

Given the investment horizon of 90 days Kinsale Capital Group is expected to generate 0.66 times more return on investment than Patterson UTI. However, Kinsale Capital Group is 1.51 times less risky than Patterson UTI. It trades about 0.04 of its potential returns per unit of risk. Patterson UTI Energy is currently generating about -0.07 per unit of risk. If you would invest  44,706  in Kinsale Capital Group on September 30, 2024 and sell it today you would earn a total of  2,362  from holding Kinsale Capital Group or generate 5.28% return on investment over 90 days.

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

Kinsale Capital Group  vs.  Patterson UTI Energy

Kinsale Capital Group

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kinsale Capital Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Kinsale Capital is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional 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 Kinsale Capital and Patterson UTI

The main advantage of trading using opposite Kinsale Capital and Patterson UTI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinsale Capital 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 Kinsale Capital Group 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.