Correlation Between Valaris and Baker Hughes
Can any of the company-specific risk be diversified away by investing in both Valaris 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 Valaris and Baker Hughes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Valaris and Baker Hughes Co, you can compare the effects of market volatilities on Valaris 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 Valaris with a short position of Baker Hughes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Valaris and Baker Hughes.
Diversification Opportunities for Valaris and Baker Hughes
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Valaris and Baker is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Valaris and Baker Hughes Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baker Hughes and Valaris 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 Valaris 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 Valaris i.e., Valaris and Baker Hughes go up and down completely randomly.
Pair Corralation between Valaris and Baker Hughes
Considering the 90-day investment horizon Valaris is expected to under-perform the Baker Hughes. In addition to that, Valaris is 1.28 times more volatile than Baker Hughes Co. It trades about -0.12 of its total potential returns per unit of risk. Baker Hughes Co is currently generating about 0.15 per unit of volatility. If you would invest 3,743 in Baker Hughes Co on September 13, 2024 and sell it today you would earn a total of 513.50 from holding Baker Hughes Co or generate 13.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Valaris vs. Baker Hughes Co
Performance |
| Timeline |
| Valaris |
| Baker Hughes |
Valaris and Baker Hughes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Valaris and Baker Hughes
The main advantage of trading using opposite Valaris and Baker Hughes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Valaris 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.| Valaris vs. Weatherford International PLC | Valaris vs. TechnipFMC PLC | Valaris vs. Geospace Technologies | Valaris vs. Cactus Inc |
| 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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