Correlation Between Halliburton and Baker Hughes

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

Diversification Opportunities for Halliburton and Baker Hughes

0.85
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Halliburton and Baker is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Halliburton and Baker Hughes A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baker Hughes A and Halliburton 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 Halliburton are associated (or correlated) with Baker Hughes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baker Hughes A has no effect on the direction of Halliburton i.e., Halliburton and Baker Hughes go up and down completely randomly.

Pair Corralation between Halliburton and Baker Hughes

Considering the 90-day investment horizon Halliburton is expected to under-perform the Baker Hughes. In addition to that, Halliburton is 1.48 times more volatile than Baker Hughes A. It trades about -0.33 of its total potential returns per unit of risk. Baker Hughes A is currently generating about -0.48 per unit of volatility. If you would invest  3,692  in Baker Hughes A on March 27, 2022 and sell it today you would lose (845.00)  from holding Baker Hughes A or give up 22.89% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy95.24%
ValuesDaily Returns

Halliburton  vs.  Baker Hughes A

 Performance (%) 
      Timeline 
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 July 2022. The new chaos may also be a sign of medium-term up-swing for the company stakeholders.

Structure and Payout Changes

Forward Annual Dividend Yield
0.016
Payout Ratio
0.26
Last Split Factor
2:1
Forward Annual Dividend Rate
0.48
Dividend Date
2022-06-22
Ex Dividend Date
2022-05-31
Last Split Date
2006-07-17

Halliburton Price Channel

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

Structure and Payout Changes

Forward Annual Dividend Yield
0.024
Payout Ratio
1.09
Forward Annual Dividend Rate
0.72
Dividend Date
2022-06-10
Ex Dividend Date
2022-05-27

Baker Price Channel

Halliburton and Baker Hughes Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Halliburton and Baker Hughes

The main advantage of trading using opposite Halliburton and Baker Hughes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Halliburton position performs unexpectedly, Baker Hughes 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 Baker Hughes will offset losses from the drop in Baker Hughes' long position.

Halliburton

Pair trading matchups for Halliburton

The idea behind Halliburton and Baker Hughes A 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.

Baker Hughes A

Pair trading matchups for Baker Hughes

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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.

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