Correlation Between Universal Health and Baker Hughes
Can any of the company-specific risk be diversified away by investing in both Universal Health and Baker Hughes 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 Universal Health and Baker Hughes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Universal Health Services and Baker Hughes Co, you can compare the effects of market volatilities on Universal Health and Baker Hughes 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 Universal Health with a short position of Baker Hughes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Health and Baker Hughes.
Diversification Opportunities for Universal Health and Baker Hughes
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Universal and Baker is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Universal Health Services and Baker Hughes Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baker Hughes and Universal Health 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 Universal Health Services are associated (or correlated) with Baker Hughes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baker Hughes has no effect on the direction of Universal Health i.e., Universal Health and Baker Hughes go up and down completely randomly.
Pair Corralation between Universal Health and Baker Hughes
Assuming the 90 days trading horizon Universal Health is expected to generate 1.14 times less return on investment than Baker Hughes. In addition to that, Universal Health is 1.12 times more volatile than Baker Hughes Co. It trades about 0.05 of its total potential returns per unit of risk. Baker Hughes Co is currently generating about 0.07 per unit of volatility. If you would invest 2,871 in Baker Hughes Co on September 12, 2024 and sell it today you would earn a total of 1,270 from holding Baker Hughes Co or generate 44.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 88.77% |
| Values | Daily Returns |
Universal Health Services vs. Baker Hughes Co
Performance |
| Timeline |
| Universal Health Services |
| Baker Hughes |
Universal Health and Baker Hughes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Health and Baker Hughes
The main advantage of trading using opposite Universal Health and Baker Hughes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Health position performs unexpectedly, Baker Hughes 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 Baker Hughes will offset losses from the drop in Baker Hughes' long position.| Universal Health vs. Hong Kong Land | Universal Health vs. Neometals | Universal Health vs. Coor Service Management | Universal Health vs. Fidelity Sustainable USD |
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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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