Correlation Between Baker Hughes and Geospace Technologies
Can any of the company-specific risk be diversified away by investing in both Baker Hughes and Geospace Technologies 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 Geospace Technologies 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 Geospace Technologies, you can compare the effects of market volatilities on Baker Hughes and Geospace Technologies 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 Geospace Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baker Hughes and Geospace Technologies.
Diversification Opportunities for Baker Hughes and Geospace Technologies
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Baker and Geospace is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Baker Hughes Co and Geospace Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Geospace Technologies 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 Geospace Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Geospace Technologies has no effect on the direction of Baker Hughes i.e., Baker Hughes and Geospace Technologies go up and down completely randomly.
Pair Corralation between Baker Hughes and Geospace Technologies
Considering the 90-day investment horizon Baker Hughes is expected to generate 1.25 times less return on investment than Geospace Technologies. But when comparing it to its historical volatility, Baker Hughes Co is 1.42 times less risky than Geospace Technologies. It trades about 0.2 of its potential returns per unit of risk. Geospace Technologies is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 1,010 in Geospace Technologies on August 23, 2024 and sell it today you would earn a total of 352.00 from holding Geospace Technologies or generate 34.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baker Hughes Co vs. Geospace Technologies
Performance |
| Timeline |
| Baker Hughes |
| Geospace Technologies |
Baker Hughes and Geospace Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baker Hughes and Geospace Technologies
The main advantage of trading using opposite Baker Hughes and Geospace Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baker Hughes position performs unexpectedly, Geospace Technologies 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 Geospace Technologies will offset losses from the drop in Geospace Technologies' long position.| Baker Hughes vs. Bristow Group | Baker Hughes vs. RPC Inc | Baker Hughes vs. NOV Inc | Baker Hughes vs. Oceaneering International |
| Geospace Technologies vs. Enerflex | Geospace Technologies vs. Oil States International | Geospace Technologies vs. Newpark Resources | Geospace Technologies vs. MRC Global |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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