Correlation Between Cactus and Baker Hughes
Can any of the company-specific risk be diversified away by investing in both Cactus 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 Cactus and Baker Hughes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cactus Inc and Baker Hughes Co, you can compare the effects of market volatilities on Cactus 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 Cactus with a short position of Baker Hughes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cactus and Baker Hughes.
Diversification Opportunities for Cactus and Baker Hughes
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Cactus and Baker is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Cactus Inc and Baker Hughes Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baker Hughes and Cactus 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 Cactus Inc 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 Cactus i.e., Cactus and Baker Hughes go up and down completely randomly.
Pair Corralation between Cactus and Baker Hughes
Considering the 90-day investment horizon Cactus Inc is expected to generate 1.32 times more return on investment than Baker Hughes. However, Cactus is 1.32 times more volatile than Baker Hughes Co. It trades about 0.08 of its potential returns per unit of risk. Baker Hughes Co is currently generating about 0.11 per unit of risk. If you would invest 3,877 in Cactus Inc on November 9, 2024 and sell it today you would earn a total of 2,101 from holding Cactus Inc or generate 54.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cactus Inc vs. Baker Hughes Co
Performance |
| Timeline |
| Cactus Inc |
| Baker Hughes |
Cactus and Baker Hughes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cactus and Baker Hughes
The main advantage of trading using opposite Cactus and Baker Hughes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cactus 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.| Cactus vs. ChampionX | Cactus vs. Expro Group Holdings | Cactus vs. Ranger Energy Services | Cactus vs. MRC Global |
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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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