Correlation Between Baker Hughes and Oceaneering International
Can any of the company-specific risk be diversified away by investing in both Baker Hughes and Oceaneering International 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 Oceaneering International 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 Oceaneering International, you can compare the effects of market volatilities on Baker Hughes and Oceaneering International 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 Oceaneering International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baker Hughes and Oceaneering International.
Diversification Opportunities for Baker Hughes and Oceaneering International
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Baker and Oceaneering is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Baker Hughes Co and Oceaneering International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oceaneering International 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 Oceaneering International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oceaneering International has no effect on the direction of Baker Hughes i.e., Baker Hughes and Oceaneering International go up and down completely randomly.
Pair Corralation between Baker Hughes and Oceaneering International
Considering the 90-day investment horizon Baker Hughes is expected to generate 1.39 times less return on investment than Oceaneering International. But when comparing it to its historical volatility, Baker Hughes Co is 1.55 times less risky than Oceaneering International. It trades about 0.08 of its potential returns per unit of risk. Oceaneering International is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2,065 in Oceaneering International on August 27, 2024 and sell it today you would earn a total of 938.00 from holding Oceaneering International or generate 45.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baker Hughes Co vs. Oceaneering International
Performance |
| Timeline |
| Baker Hughes |
| Oceaneering International |
Baker Hughes and Oceaneering International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baker Hughes and Oceaneering International
The main advantage of trading using opposite Baker Hughes and Oceaneering International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baker Hughes position performs unexpectedly, Oceaneering International 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 Oceaneering International will offset losses from the drop in Oceaneering International'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 |
| Oceaneering International vs. Helix Energy Solutions | Oceaneering International vs. Newpark Resources | Oceaneering International vs. RPC Inc | Oceaneering International vs. Oil States International |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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