Correlation Between Baker Hughes and ONEOK
Can any of the company-specific risk be diversified away by investing in both Baker Hughes and ONEOK 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 ONEOK into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baker Hughes Co and ONEOK Inc, you can compare the effects of market volatilities on Baker Hughes and ONEOK 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 ONEOK. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baker Hughes and ONEOK.
Diversification Opportunities for Baker Hughes and ONEOK
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Baker and ONEOK is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Baker Hughes Co and ONEOK Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ONEOK 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 Co are associated (or correlated) with ONEOK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ONEOK Inc has no effect on the direction of Baker Hughes i.e., Baker Hughes and ONEOK go up and down completely randomly.
Pair Corralation between Baker Hughes and ONEOK
Assuming the 90 days trading horizon Baker Hughes is expected to generate 1.34 times less return on investment than ONEOK. In addition to that, Baker Hughes is 1.21 times more volatile than ONEOK Inc. It trades about 0.05 of its total potential returns per unit of risk. ONEOK Inc is currently generating about 0.08 per unit of volatility. If you would invest 5,747 in ONEOK Inc on September 23, 2024 and sell it today you would earn a total of 4,238 from holding ONEOK Inc or generate 73.74% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Baker Hughes Co vs. ONEOK Inc
Performance |
Timeline |
Baker Hughes |
ONEOK Inc |
Baker Hughes and ONEOK Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Baker Hughes and ONEOK
The main advantage of trading using opposite Baker Hughes and ONEOK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baker Hughes position performs unexpectedly, ONEOK 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 ONEOK will offset losses from the drop in ONEOK's long position.Baker Hughes vs. Southern Copper Corp | Baker Hughes vs. Endeavour Mining Corp | Baker Hughes vs. Metals Exploration Plc | Baker Hughes vs. AMG Advanced Metallurgical |
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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 the Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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