Correlation Between URU Metals and Baker Hughes
Can any of the company-specific risk be diversified away by investing in both URU Metals 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 URU Metals and Baker Hughes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between URU Metals and Baker Hughes Co, you can compare the effects of market volatilities on URU Metals 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 URU Metals with a short position of Baker Hughes. Check out your portfolio center. Please also check ongoing floating volatility patterns of URU Metals and Baker Hughes.
Diversification Opportunities for URU Metals and Baker Hughes
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between URU and Baker is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding URU Metals and Baker Hughes Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baker Hughes and URU Metals 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 URU Metals 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 URU Metals i.e., URU Metals and Baker Hughes go up and down completely randomly.
Pair Corralation between URU Metals and Baker Hughes
Assuming the 90 days trading horizon URU Metals is expected to generate 3.26 times less return on investment than Baker Hughes. In addition to that, URU Metals is 1.41 times more volatile than Baker Hughes Co. It trades about 0.01 of its total potential returns per unit of risk. Baker Hughes Co is currently generating about 0.05 per unit of volatility. If you would invest 4,252 in Baker Hughes Co on October 13, 2024 and sell it today you would earn a total of 54.00 from holding Baker Hughes Co or generate 1.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 90.48% |
| Values | Daily Returns |
URU Metals vs. Baker Hughes Co
Performance |
| Timeline |
| URU Metals |
| Baker Hughes |
URU Metals and Baker Hughes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with URU Metals and Baker Hughes
The main advantage of trading using opposite URU Metals and Baker Hughes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if URU Metals 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.| URU Metals vs. Fresenius Medical Care | URU Metals vs. Darden Restaurants | URU Metals vs. Delta Air Lines | URU Metals vs. Scandic Hotels Group |
| Baker Hughes vs. Lundin Mining Corp | Baker Hughes vs. Deltex Medical Group | Baker Hughes vs. Cornish Metals | Baker Hughes vs. URU Metals |
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 Correlations module to find global opportunities by holding instruments from different markets.
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