Correlation Between Oil States and Baker Hughes
Can any of the company-specific risk be diversified away by investing in both Oil States and Baker Hughes 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 Oil States and Baker Hughes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oil States International and Baker Hughes Co, you can compare the effects of market volatilities on Oil States and Baker Hughes 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 Oil States with a short position of Baker Hughes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oil States and Baker Hughes.
Diversification Opportunities for Oil States and Baker Hughes
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Oil and Baker is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Oil States International and Baker Hughes Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baker Hughes and Oil States 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 Oil States International are associated (or correlated) with Baker Hughes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baker Hughes has no effect on the direction of Oil States i.e., Oil States and Baker Hughes go up and down completely randomly.
Pair Corralation between Oil States and Baker Hughes
Considering the 90-day investment horizon Oil States International is expected to under-perform the Baker Hughes. But the stock apears to be less risky and, when comparing its historical volatility, Oil States International is 1.07 times less risky than Baker Hughes. The stock trades about -0.13 of its potential returns per unit of risk. The Baker Hughes Co is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 4,631 in Baker Hughes Co on November 18, 2024 and sell it today you would earn a total of 9.00 from holding Baker Hughes Co or generate 0.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Oil States International vs. Baker Hughes Co
Performance |
| Timeline |
| Oil States International |
| Baker Hughes |
Oil States and Baker Hughes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oil States and Baker Hughes
The main advantage of trading using opposite Oil States and Baker Hughes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oil States position performs unexpectedly, Baker Hughes 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 Baker Hughes will offset losses from the drop in Baker Hughes' long position.| Oil States vs. Oceaneering International | Oil States vs. ChampionX | Oil States vs. TechnipFMC PLC | Oil States vs. Helix Energy Solutions |
| Baker Hughes vs. Schlumberger NV | Baker Hughes vs. NOV Inc | Baker Hughes vs. Weatherford International PLC | Baker Hughes vs. Tenaris SA ADR |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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