Correlation Between Baker Hughes and Now
Can any of the company-specific risk be diversified away by investing in both Baker Hughes and Now 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 Baker Hughes and Now into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baker Hughes Co and Now Inc, you can compare the effects of market volatilities on Baker Hughes and Now 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 Baker Hughes with a short position of Now. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baker Hughes and Now.
Diversification Opportunities for Baker Hughes and Now
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Baker and Now is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Baker Hughes Co and Now Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Now Inc and Baker Hughes 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 Baker Hughes Co are associated (or correlated) with Now. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Now Inc has no effect on the direction of Baker Hughes i.e., Baker Hughes and Now go up and down completely randomly.
Pair Corralation between Baker Hughes and Now
Considering the 90-day investment horizon Baker Hughes Co is expected to generate 0.71 times more return on investment than Now. However, Baker Hughes Co is 1.4 times less risky than Now. It trades about 0.07 of its potential returns per unit of risk. Now Inc is currently generating about 0.03 per unit of risk. If you would invest 2,700 in Baker Hughes Co on August 27, 2024 and sell it today you would earn a total of 1,725 from holding Baker Hughes Co or generate 63.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baker Hughes Co vs. Now Inc
Performance |
| Timeline |
| Baker Hughes |
| Now Inc |
Baker Hughes and Now Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baker Hughes and Now
The main advantage of trading using opposite Baker Hughes and Now positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baker Hughes position performs unexpectedly, Now 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 Now will offset losses from the drop in Now's long position.| Baker Hughes vs. Schlumberger NV | Baker Hughes vs. NOV Inc | Baker Hughes vs. Weatherford International PLC | Baker Hughes vs. Tenaris SA ADR |
| Now vs. Global Industrial Co | Now vs. BlueLinx Holdings | Now vs. WESCO International | Now vs. MSC Industrial Direct |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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