Correlation Between Apple and Baker Hughes

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Can any of the company-specific risk be diversified away by investing in both Apple 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 Apple and Baker Hughes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and Baker Hughes A, you can compare the effects of market volatilities on Apple 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 Apple with a short position of Baker Hughes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Baker Hughes.

Diversification Opportunities for Apple and Baker Hughes

0.75
  Correlation Coefficient

Poor diversification

The 1 month correlation between Apple and Baker is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Baker Hughes A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baker Hughes A and Apple 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 Apple 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 A has no effect on the direction of Apple i.e., Apple and Baker Hughes go up and down completely randomly.

Pair Corralation between Apple and Baker Hughes

Given the investment horizon of 90 days Apple Inc is expected to under-perform the Baker Hughes. But the stock apears to be less risky and, when comparing its historical volatility, Apple Inc is 1.38 times less risky than Baker Hughes. The stock trades about -0.04 of its potential returns per unit of risk. The Baker Hughes A is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  2,487  in Baker Hughes A on July 1, 2022 and sell it today you would lose (359.00)  from holding Baker Hughes A or give up 14.44% of portfolio value over 90 days.
Time Period1 Month [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Apple Inc  vs.  Baker Hughes A

 Performance (%) 
       Timeline  
Apple Inc 
Apple Performance
0 of 100
Over the last 90 days Apple Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with conflicting performance in the last few months, the Stock's basic indicators remain relatively steady which may send shares a bit higher in October 2022. The new chaos may also be a sign of medium-term up-swing for the company stakeholders.

Apple Price Channel

Baker Hughes A 
Baker Performance
0 of 100
Over the last 90 days Baker Hughes A has generated negative risk-adjusted returns adding no value to investors with long positions. Even with conflicting performance in the last few months, the Stock's forward-looking signals remain relatively invariable which may send shares a bit higher in October 2022. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Baker Price Channel

Apple and Baker Hughes Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Apple and Baker Hughes

The main advantage of trading using opposite Apple and Baker Hughes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple 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.
Apple vs. Amazon Inc
The idea behind Apple Inc and Baker Hughes A pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
Baker Hughes vs. Amazon Inc
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.

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