Correlation Between Baker Hughes and Halliburton

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

Diversification Opportunities for Baker Hughes and Halliburton

0.97
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Baker and Halliburton is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Baker Hughes A and Halliburton in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Halliburton 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 Halliburton. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Halliburton has no effect on the direction of Baker Hughes i.e., Baker Hughes and Halliburton go up and down completely randomly.

Pair Corralation between Baker Hughes and Halliburton

Considering the 90-day investment horizon Baker Hughes A is expected to under-perform the Halliburton. But the stock apears to be less risky and, when comparing its historical volatility, Baker Hughes A is 1.15 times less risky than Halliburton. The stock trades about -0.18 of its potential returns per unit of risk. The Halliburton is currently generating about -0.13 of returns per unit of risk over similar time horizon. If you would invest  3,777  in Halliburton on May 17, 2022 and sell it today you would lose (993.00)  from holding Halliburton or give up 26.29% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Baker Hughes A  vs.  Halliburton

 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 unsteady 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

Halliburton 
Halliburton Performance
0 of 100
Over the last 90 days Halliburton 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 basic indicators remain relatively steady which may send shares a bit higher in September 2022. The new chaos may also be a sign of medium-term up-swing for the company stakeholders.

Halliburton Price Channel

Baker Hughes and Halliburton Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Baker Hughes and Halliburton

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

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