Correlation Between Baker Hughes and Ranger Energy
Can any of the company-specific risk be diversified away by investing in both Baker Hughes and Ranger Energy 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 Ranger Energy 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 Ranger Energy Services, you can compare the effects of market volatilities on Baker Hughes and Ranger Energy 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 Ranger Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baker Hughes and Ranger Energy.
Diversification Opportunities for Baker Hughes and Ranger Energy
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Baker and Ranger is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Baker Hughes Co and Ranger Energy Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ranger Energy Services 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 Ranger Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ranger Energy Services has no effect on the direction of Baker Hughes i.e., Baker Hughes and Ranger Energy go up and down completely randomly.
Pair Corralation between Baker Hughes and Ranger Energy
Considering the 90-day investment horizon Baker Hughes is expected to generate 1.1 times less return on investment than Ranger Energy. But when comparing it to its historical volatility, Baker Hughes Co is 1.37 times less risky than Ranger Energy. It trades about 0.07 of its potential returns per unit of risk. Ranger Energy Services is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,028 in Ranger Energy Services on August 24, 2024 and sell it today you would earn a total of 642.00 from holding Ranger Energy Services or generate 62.45% 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. Ranger Energy Services
Performance |
| Timeline |
| Baker Hughes |
| Ranger Energy Services |
Baker Hughes and Ranger Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baker Hughes and Ranger Energy
The main advantage of trading using opposite Baker Hughes and Ranger Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baker Hughes position performs unexpectedly, Ranger Energy 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 Ranger Energy will offset losses from the drop in Ranger Energy's long position.| Baker Hughes vs. Bristow Group | Baker Hughes vs. RPC Inc | Baker Hughes vs. NOV Inc | Baker Hughes vs. Oceaneering International |
| Ranger Energy vs. Newpark Resources | Ranger Energy vs. Archrock | Ranger Energy vs. Bristow Group | Ranger Energy vs. Flotek Industries |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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