Correlation Between Baker Hughes and Amazon

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

Diversification Opportunities for Baker Hughes and Amazon

-0.73
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Baker and Amazon is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Baker Hughes Co and Amazon Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazon Inc 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 Co are associated (or correlated) with Amazon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amazon Inc has no effect on the direction of Baker Hughes i.e., Baker Hughes and Amazon go up and down completely randomly.

Pair Corralation between Baker Hughes and Amazon

Considering the 90-day investment horizon Baker Hughes Co is expected to under-perform the Amazon. But the stock apears to be less risky and, when comparing its historical volatility, Baker Hughes Co is 1.66 times less risky than Amazon. The stock trades about -0.14 of its potential returns per unit of risk. The Amazon Inc is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  9,053  in Amazon Inc on September 6, 2022 and sell it today you would earn a total of  48.00  from holding Amazon Inc or generate 0.53% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Baker Hughes Co  vs.  Amazon Inc

 Performance (%) 
       Timeline  
Baker Hughes 
Baker Performance
7 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Baker Hughes Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak forward-looking signals, Baker Hughes reported solid returns over the last few months and may actually be approaching a breakup point.

Baker Price Channel

Amazon Inc 
Amazon Performance
0 of 100
Over the last 90 days Amazon Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2023. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Amazon Price Channel

Baker Hughes and Amazon Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Baker Hughes and Amazon

The main advantage of trading using opposite Baker Hughes and Amazon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baker Hughes position performs unexpectedly, Amazon 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 Amazon will offset losses from the drop in Amazon's long position.
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The idea behind Baker Hughes Co and Amazon Inc 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.

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