Correlation Between Freeport McMoRan and Baker Hughes
Can any of the company-specific risk be diversified away by investing in both Freeport McMoRan 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 Freeport McMoRan and Baker Hughes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Freeport McMoRan and Baker Hughes Co, you can compare the effects of market volatilities on Freeport McMoRan 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 Freeport McMoRan with a short position of Baker Hughes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Freeport McMoRan and Baker Hughes.
Diversification Opportunities for Freeport McMoRan and Baker Hughes
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Freeport and Baker is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Freeport McMoRan and Baker Hughes Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baker Hughes and Freeport McMoRan 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 Freeport McMoRan 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 Freeport McMoRan i.e., Freeport McMoRan and Baker Hughes go up and down completely randomly.
Pair Corralation between Freeport McMoRan and Baker Hughes
Assuming the 90 days trading horizon Freeport McMoRan is expected to under-perform the Baker Hughes. In addition to that, Freeport McMoRan is 1.36 times more volatile than Baker Hughes Co. It trades about -0.24 of its total potential returns per unit of risk. Baker Hughes Co is currently generating about -0.31 per unit of volatility. If you would invest 4,465 in Baker Hughes Co on September 23, 2024 and sell it today you would lose (453.00) from holding Baker Hughes Co or give up 10.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Freeport McMoRan vs. Baker Hughes Co
Performance |
| Timeline |
| Freeport McMoRan |
| Baker Hughes |
Freeport McMoRan and Baker Hughes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Freeport McMoRan and Baker Hughes
The main advantage of trading using opposite Freeport McMoRan and Baker Hughes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Freeport McMoRan 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.| Freeport McMoRan vs. Uniper SE | Freeport McMoRan vs. Mulberry Group PLC | Freeport McMoRan vs. London Security Plc | Freeport McMoRan 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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