Correlation Between Baker Hughes and Tenaris SA
Can any of the company-specific risk be diversified away by investing in both Baker Hughes and Tenaris SA 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 Tenaris SA 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 Tenaris SA ADR, you can compare the effects of market volatilities on Baker Hughes and Tenaris SA 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 Tenaris SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baker Hughes and Tenaris SA.
Diversification Opportunities for Baker Hughes and Tenaris SA
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Baker and Tenaris is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Baker Hughes Co and Tenaris SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tenaris SA ADR 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 Tenaris SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tenaris SA ADR has no effect on the direction of Baker Hughes i.e., Baker Hughes and Tenaris SA go up and down completely randomly.
Pair Corralation between Baker Hughes and Tenaris SA
Considering the 90-day investment horizon Baker Hughes Co is expected to generate 1.82 times more return on investment than Tenaris SA. However, Baker Hughes is 1.82 times more volatile than Tenaris SA ADR. It trades about 0.21 of its potential returns per unit of risk. Tenaris SA ADR is currently generating about 0.08 per unit of risk. If you would invest 4,156 in Baker Hughes Co on November 2, 2024 and sell it today you would earn a total of 304.00 from holding Baker Hughes Co or generate 7.31% 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. Tenaris SA ADR
Performance |
| Timeline |
| Baker Hughes |
| Tenaris SA ADR |
Baker Hughes and Tenaris SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baker Hughes and Tenaris SA
The main advantage of trading using opposite Baker Hughes and Tenaris SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baker Hughes position performs unexpectedly, Tenaris SA 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 Tenaris SA will offset losses from the drop in Tenaris SA'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 |
| Tenaris SA vs. Cannabusiness Group | Tenaris SA vs. Dewmar Intl Bmc | Tenaris SA vs. Aquagold International | Tenaris SA vs. Morningstar Unconstrained Allocation |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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