Correlation Between Baker Hughes and Allovir

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

Diversification Opportunities for Baker Hughes and Allovir

-0.58
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Baker and Allovir is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Baker Hughes A and Allovir in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allovir and Baker Hughes 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 Baker Hughes A are associated (or correlated) with Allovir. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allovir has no effect on the direction of Baker Hughes i.e., Baker Hughes and Allovir go up and down completely randomly.

Pair Corralation between Baker Hughes and Allovir

Considering the 90-day investment horizon Baker Hughes A is expected to generate 0.44 times more return on investment than Allovir. However, Baker Hughes A is 2.29 times less risky than Allovir. It trades about -0.01 of its potential returns per unit of risk. Allovir is currently generating about -0.04 per unit of risk. If you would invest  2,443  in Baker Hughes A on July 3, 2022 and sell it today you would lose (347.00)  from holding Baker Hughes A or give up 14.2% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Baker Hughes A  vs.  Allovir

 Performance (%) 
       Timeline  
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 November 2022. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Baker Price Channel

Allovir 
Allovir Performance
11 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Allovir are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Allovir reported solid returns over the last few months and may actually be approaching a breakup point.

Allovir Price Channel

Baker Hughes and Allovir Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Baker Hughes and Allovir

The main advantage of trading using opposite Baker Hughes and Allovir positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baker Hughes position performs unexpectedly, Allovir 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 Allovir will offset losses from the drop in Allovir's long position.
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The idea behind Baker Hughes A and Allovir 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.
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.

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