Correlation Between Baker Hughes and TOTAL ENERGY

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

Diversification Opportunities for Baker Hughes and TOTAL ENERGY

0.59

Correlation Coefficient

Baker Hughes  TOTAL ENERGY

Very weak diversification

The 3 months correlation between Baker and TOTAL is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Baker Hughes Co and TOTAL ENERGY SERVS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TOTAL ENERGY SERVS 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 TOTAL ENERGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TOTAL ENERGY SERVS has no effect on the direction of Baker Hughes i.e., Baker Hughes and TOTAL ENERGY go up and down completely randomly.

Pair Corralation between Baker Hughes and TOTAL ENERGY

Assuming the 90 days horizon Baker Hughes Co is expected to generate 0.79 times more return on investment than TOTAL ENERGY. However, Baker Hughes Co is 1.27 times less risky than TOTAL ENERGY. It trades about 0.06 of its potential returns per unit of risk. TOTAL ENERGY SERVS is currently generating about -0.08 per unit of risk. If you would invest  3,859  in Baker Hughes Co on December 28, 2024 and sell it today you would earn a total of  265.00  from holding Baker Hughes Co or generate 6.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Baker Hughes Co  vs.  TOTAL ENERGY SERVS

Baker Hughes

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Baker Hughes Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Baker Hughes may actually be approaching a critical reversion point that can send shares even higher in April 2025.

TOTAL ENERGY SERVS

Risk-Adjusted Performance

Very Weak

Over the last 90 days TOTAL ENERGY SERVS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Baker Hughes and TOTAL ENERGY

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

The idea behind Baker Hughes Co and TOTAL ENERGY SERVS 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.

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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 Stocks Directory module to find actively traded stocks across global markets.