Correlation Between Baker Hughes and Halliburton
Can any of the company-specific risk be diversified away by investing in both Baker Hughes and Halliburton 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 Halliburton 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 Halliburton, you can compare the effects of market volatilities on Baker Hughes and Halliburton 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 Halliburton. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baker Hughes and Halliburton.
Diversification Opportunities for Baker Hughes and Halliburton
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Baker and Halliburton is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Baker Hughes Co and Halliburton in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Halliburton 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 Halliburton. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Halliburton has no effect on the direction of Baker Hughes i.e., Baker Hughes and Halliburton go up and down completely randomly.
Pair Corralation between Baker Hughes and Halliburton
Considering the 90-day investment horizon Baker Hughes Co is expected to generate 1.01 times more return on investment than Halliburton. However, Baker Hughes is 1.01 times more volatile than Halliburton. It trades about 0.15 of its potential returns per unit of risk. Halliburton is currently generating about -0.04 per unit of risk. If you would invest 3,203 in Baker Hughes Co on August 24, 2024 and sell it today you would earn a total of 1,285 from holding Baker Hughes Co or generate 40.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baker Hughes Co vs. Halliburton
Performance |
| Timeline |
| Baker Hughes |
| Halliburton |
Baker Hughes and Halliburton Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baker Hughes and Halliburton
The main advantage of trading using opposite Baker Hughes and Halliburton positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baker Hughes position performs unexpectedly, Halliburton 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 Halliburton will offset losses from the drop in Halliburton's long position.| Baker Hughes vs. Bristow Group | Baker Hughes vs. RPC Inc | Baker Hughes vs. NOV Inc | Baker Hughes vs. Oceaneering International |
| Halliburton vs. Baker Hughes Co | Halliburton vs. NOV Inc | Halliburton vs. Tenaris SA ADR | Halliburton vs. Weatherford International PLC |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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