Correlation Between Baker Hughes and Tetra Technologies
Can any of the company-specific risk be diversified away by investing in both Baker Hughes and Tetra Technologies 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 Tetra Technologies 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 Tetra Technologies, you can compare the effects of market volatilities on Baker Hughes and Tetra Technologies 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 Tetra Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baker Hughes and Tetra Technologies.
Diversification Opportunities for Baker Hughes and Tetra Technologies
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Baker and Tetra is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Baker Hughes Co and Tetra Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tetra Technologies 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 Tetra Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tetra Technologies has no effect on the direction of Baker Hughes i.e., Baker Hughes and Tetra Technologies go up and down completely randomly.
Pair Corralation between Baker Hughes and Tetra Technologies
Considering the 90-day investment horizon Baker Hughes is expected to generate 1.69 times less return on investment than Tetra Technologies. But when comparing it to its historical volatility, Baker Hughes Co is 2.39 times less risky than Tetra Technologies. It trades about 0.36 of its potential returns per unit of risk. Tetra Technologies is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 296.00 in Tetra Technologies on August 24, 2024 and sell it today you would earn a total of 108.00 from holding Tetra Technologies or generate 36.49% 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. Tetra Technologies
Performance |
| Timeline |
| Baker Hughes |
| Tetra Technologies |
Baker Hughes and Tetra Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baker Hughes and Tetra Technologies
The main advantage of trading using opposite Baker Hughes and Tetra Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baker Hughes position performs unexpectedly, Tetra Technologies 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 Tetra Technologies will offset losses from the drop in Tetra Technologies' long position.| Baker Hughes vs. Schlumberger NV | Baker Hughes vs. NOV Inc | Baker Hughes vs. Weatherford International PLC | Baker Hughes vs. Tenaris SA ADR |
| Tetra Technologies vs. MRC Global | Tetra Technologies vs. Oil States International | Tetra Technologies vs. Ranger Energy Services | Tetra Technologies vs. Oceaneering 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
Other Complementary Tools
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk |