Correlation Between Baker Hughes and Land Securities
Can any of the company-specific risk be diversified away by investing in both Baker Hughes and Land Securities 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 Land Securities 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 Land Securities Group, you can compare the effects of market volatilities on Baker Hughes and Land Securities 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 Land Securities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baker Hughes and Land Securities.
Diversification Opportunities for Baker Hughes and Land Securities
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Baker and Land is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Baker Hughes Co and Land Securities Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Land Securities Group 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 Land Securities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Land Securities Group has no effect on the direction of Baker Hughes i.e., Baker Hughes and Land Securities go up and down completely randomly.
Pair Corralation between Baker Hughes and Land Securities
Considering the 90-day investment horizon Baker Hughes Co is expected to generate 1.09 times more return on investment than Land Securities. However, Baker Hughes is 1.09 times more volatile than Land Securities Group. It trades about 0.3 of its potential returns per unit of risk. Land Securities Group is currently generating about -0.16 per unit of risk. If you would invest 3,688 in Baker Hughes Co on August 30, 2024 and sell it today you would earn a total of 665.00 from holding Baker Hughes Co or generate 18.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Baker Hughes Co vs. Land Securities Group
Performance |
| Timeline |
| Baker Hughes |
| Land Securities Group |
Baker Hughes and Land Securities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baker Hughes and Land Securities
The main advantage of trading using opposite Baker Hughes and Land Securities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baker Hughes position performs unexpectedly, Land Securities 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 Land Securities will offset losses from the drop in Land Securities' long position.| Baker Hughes vs. Schlumberger NV | Baker Hughes vs. NOV Inc | Baker Hughes vs. Weatherford International PLC | Baker Hughes vs. Tenaris SA ADR |
| Land Securities vs. Land Securities Group | Land Securities vs. British Land | Land Securities vs. British Land | Land Securities vs. Taylor Wimpey 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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