Correlation Between TechnipFMC PLC and Baker Hughes
Can any of the company-specific risk be diversified away by investing in both TechnipFMC PLC 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 TechnipFMC PLC and Baker Hughes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TechnipFMC PLC and Baker Hughes Co, you can compare the effects of market volatilities on TechnipFMC PLC 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 TechnipFMC PLC with a short position of Baker Hughes. Check out your portfolio center. Please also check ongoing floating volatility patterns of TechnipFMC PLC and Baker Hughes.
Diversification Opportunities for TechnipFMC PLC and Baker Hughes
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between TechnipFMC and Baker is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding TechnipFMC PLC and Baker Hughes Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baker Hughes and TechnipFMC PLC 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 TechnipFMC PLC 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 TechnipFMC PLC i.e., TechnipFMC PLC and Baker Hughes go up and down completely randomly.
Pair Corralation between TechnipFMC PLC and Baker Hughes
Assuming the 90 days horizon TechnipFMC PLC is expected to generate 0.86 times more return on investment than Baker Hughes. However, TechnipFMC PLC is 1.16 times less risky than Baker Hughes. It trades about 0.39 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 2,424 in TechnipFMC PLC on September 1, 2024 and sell it today you would earn a total of 522.00 from holding TechnipFMC PLC or generate 21.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
TechnipFMC PLC vs. Baker Hughes Co
Performance |
| Timeline |
| TechnipFMC PLC |
| Baker Hughes |
TechnipFMC PLC and Baker Hughes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TechnipFMC PLC and Baker Hughes
The main advantage of trading using opposite TechnipFMC PLC and Baker Hughes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TechnipFMC PLC 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.| TechnipFMC PLC vs. Collins Foods Limited | TechnipFMC PLC vs. Media and Games | TechnipFMC PLC vs. CN MODERN DAIRY | TechnipFMC PLC vs. JJ SNACK FOODS |
| Baker Hughes vs. BOSTON BEER A | Baker Hughes vs. THAI BEVERAGE | Baker Hughes vs. Autohome ADR | Baker Hughes vs. MOLSON RS BEVERAGE |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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