Correlation Between Baker Hughes and NOV

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

Diversification Opportunities for Baker Hughes and NOV

-0.06
  Correlation Coefficient

Good diversification

The 3 months correlation between Baker and NOV is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Baker Hughes A and NOV Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NOV 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 A are associated (or correlated) with NOV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NOV Inc has no effect on the direction of Baker Hughes i.e., Baker Hughes and NOV go up and down completely randomly.

Pair Corralation between Baker Hughes and NOV

Considering the 90-day investment horizon Baker Hughes A is expected to generate 1.05 times more return on investment than NOV. However, Baker Hughes is 1.05 times more volatile than NOV Inc. It trades about -0.16 of its potential returns per unit of risk. NOV Inc is currently generating about -0.18 per unit of risk. If you would invest  2,569  in Baker Hughes A on June 29, 2022 and sell it today you would lose (493.00)  from holding Baker Hughes A or give up 19.19% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Baker Hughes A  vs.  NOV Inc

 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 October 2022. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Baker Price Channel

NOV Inc 
NOV Performance
0 of 100
Over the last 90 days NOV Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

NOV Price Channel

Baker Hughes and NOV Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Baker Hughes and NOV

The main advantage of trading using opposite Baker Hughes and NOV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baker Hughes position performs unexpectedly, NOV 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 NOV will offset losses from the drop in NOV's long position.
Baker Hughes vs. Kibush Capital Corp
The idea behind Baker Hughes A and NOV 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.
NOV vs. Kibush Capital Corp
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.

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