Correlation Between Las Vegas and Baker Hughes
Can any of the company-specific risk be diversified away by investing in both Las Vegas 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 Las Vegas and Baker Hughes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Las Vegas Sands and Baker Hughes Co, you can compare the effects of market volatilities on Las Vegas 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 Las Vegas with a short position of Baker Hughes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Las Vegas and Baker Hughes.
Diversification Opportunities for Las Vegas and Baker Hughes
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Las and Baker is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Las Vegas Sands and Baker Hughes Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baker Hughes and Las Vegas 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 Las Vegas Sands 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 Las Vegas i.e., Las Vegas and Baker Hughes go up and down completely randomly.
Pair Corralation between Las Vegas and Baker Hughes
Assuming the 90 days trading horizon Las Vegas Sands is expected to generate 0.96 times more return on investment than Baker Hughes. However, Las Vegas Sands is 1.04 times less risky than Baker Hughes. It trades about 0.13 of its potential returns per unit of risk. Baker Hughes Co is currently generating about -0.31 per unit of risk. If you would invest 5,015 in Las Vegas Sands on September 23, 2024 and sell it today you would earn a total of 196.00 from holding Las Vegas Sands or generate 3.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Las Vegas Sands vs. Baker Hughes Co
Performance |
| Timeline |
| Las Vegas Sands |
| Baker Hughes |
Las Vegas and Baker Hughes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Las Vegas and Baker Hughes
The main advantage of trading using opposite Las Vegas and Baker Hughes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Las Vegas 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.| Las Vegas vs. Uniper SE | Las Vegas vs. Mulberry Group PLC | Las Vegas vs. London Security Plc | Las Vegas vs. Triad Group PLC |
| Baker Hughes vs. Southern Copper Corp | Baker Hughes vs. Endeavour Mining Corp | Baker Hughes vs. Metals Exploration Plc | Baker Hughes vs. AMG Advanced Metallurgical |
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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