Correlation Between Baker Hughes and Dynamic Materials

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

Diversification Opportunities for Baker Hughes and Dynamic Materials

0.2
  Correlation Coefficient

Modest diversification

The 3 months correlation between Baker and Dynamic is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Baker Hughes A and Dynamic Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dynamic Materials 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 Dynamic Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dynamic Materials has no effect on the direction of Baker Hughes i.e., Baker Hughes and Dynamic Materials go up and down completely randomly.

Pair Corralation between Baker Hughes and Dynamic Materials

Considering the 90-day investment horizon Baker Hughes A is expected to generate 0.58 times more return on investment than Dynamic Materials. However, Baker Hughes A is 1.73 times less risky than Dynamic Materials. It trades about -0.28 of its potential returns per unit of risk. Dynamic Materials is currently generating about -0.25 per unit of risk. If you would invest  2,528  in Baker Hughes A on July 4, 2022 and sell it today you would lose (432.00)  from holding Baker Hughes A or give up 17.09% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Baker Hughes A  vs.  Dynamic Materials

 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

Dynamic Materials 
Dynamic Performance
0 of 100
Over the last 90 days Dynamic Materials has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively steady basic indicators, Dynamic Materials is not utilizing all of its potentials. The latest stock price chaos, may contribute to medium-term losses for the stakeholders.

Dynamic Price Channel

Baker Hughes and Dynamic Materials Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Baker Hughes and Dynamic Materials

The main advantage of trading using opposite Baker Hughes and Dynamic Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baker Hughes position performs unexpectedly, Dynamic Materials 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 Dynamic Materials will offset losses from the drop in Dynamic Materials' long position.
Baker Hughes vs. Amazon Inc
The idea behind Baker Hughes A and Dynamic Materials 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.
Dynamic Materials 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..

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