Correlation Between Baker Hughes and Boeing

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Can any of the company-specific risk be diversified away by investing in both Baker Hughes and Boeing 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 Boeing 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 Boeing Company, you can compare the effects of market volatilities on Baker Hughes and Boeing 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 Boeing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baker Hughes and Boeing.

Diversification Opportunities for Baker Hughes and Boeing

-0.75
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Baker and Boeing is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Baker Hughes A and Boeing Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boeing Company 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 Boeing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boeing Company has no effect on the direction of Baker Hughes i.e., Baker Hughes and Boeing go up and down completely randomly.

Pair Corralation between Baker Hughes and Boeing

Considering the 90-day investment horizon Baker Hughes A is expected to under-perform the Boeing. In addition to that, Baker Hughes is 1.17 times more volatile than Boeing Company. It trades about -0.22 of its total potential returns per unit of risk. Boeing Company is currently generating about 0.33 per unit of volatility. If you would invest  13,699  in Boeing Company on May 11, 2022 and sell it today you would earn a total of  2,783  from holding Boeing Company or generate 20.32% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Baker Hughes A  vs.  Boeing Company

 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 weak performance in the last few months, the Stock's forward-looking signals remain relatively invariable which may send shares a bit higher in September 2022. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Baker Price Channel

Boeing Company 
Boeing Performance
10 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Boeing Company are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Boeing sustained solid returns over the last few months and may actually be approaching a breakup point.

Boeing Price Channel

Baker Hughes and Boeing Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Baker Hughes and Boeing

The main advantage of trading using opposite Baker Hughes and Boeing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baker Hughes position performs unexpectedly, Boeing 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 Boeing will offset losses from the drop in Boeing's long position.
The idea behind Baker Hughes A and Boeing Company 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.
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 Price Transformation module to use Price Transformation models to analyze depth of different equity instruments across global markets.

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