Correlation Between Baker Hughes and MRC Global
Can any of the company-specific risk be diversified away by investing in both Baker Hughes and MRC Global 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 MRC Global 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 MRC Global, you can compare the effects of market volatilities on Baker Hughes and MRC Global 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 MRC Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baker Hughes and MRC Global.
Diversification Opportunities for Baker Hughes and MRC Global
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Baker and MRC is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Baker Hughes Co and MRC Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MRC Global 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 MRC Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MRC Global has no effect on the direction of Baker Hughes i.e., Baker Hughes and MRC Global go up and down completely randomly.
Pair Corralation between Baker Hughes and MRC Global
Considering the 90-day investment horizon Baker Hughes Co is expected to generate 0.7 times more return on investment than MRC Global. However, Baker Hughes Co is 1.43 times less risky than MRC Global. It trades about 0.07 of its potential returns per unit of risk. MRC Global is currently generating about 0.03 per unit of risk. If you would invest 2,654 in Baker Hughes Co on August 26, 2024 and sell it today you would earn a total of 1,771 from holding Baker Hughes Co or generate 66.73% 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. MRC Global
Performance |
| Timeline |
| Baker Hughes |
| MRC Global |
Baker Hughes and MRC Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baker Hughes and MRC Global
The main advantage of trading using opposite Baker Hughes and MRC Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baker Hughes position performs unexpectedly, MRC Global 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 MRC Global will offset losses from the drop in MRC Global'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 |
| MRC Global vs. NOV Inc | MRC Global vs. Ranger Energy Services | MRC Global vs. Oil States International | MRC Global vs. Geospace Technologies |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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