Correlation Between Baker Hughes and Endeavour Mining
Can any of the company-specific risk be diversified away by investing in both Baker Hughes and Endeavour Mining 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 Endeavour Mining 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 Endeavour Mining PLC, you can compare the effects of market volatilities on Baker Hughes and Endeavour Mining 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 Endeavour Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baker Hughes and Endeavour Mining.
Diversification Opportunities for Baker Hughes and Endeavour Mining
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Baker and Endeavour is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Baker Hughes Co and Endeavour Mining PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Endeavour Mining PLC 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 Endeavour Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Endeavour Mining PLC has no effect on the direction of Baker Hughes i.e., Baker Hughes and Endeavour Mining go up and down completely randomly.
Pair Corralation between Baker Hughes and Endeavour Mining
Assuming the 90 days horizon Baker Hughes Co is expected to generate 1.08 times more return on investment than Endeavour Mining. However, Baker Hughes is 1.08 times more volatile than Endeavour Mining PLC. It trades about 0.21 of its potential returns per unit of risk. Endeavour Mining PLC is currently generating about -0.14 per unit of risk. If you would invest 3,403 in Baker Hughes Co on October 25, 2024 and sell it today you would earn a total of 1,010 from holding Baker Hughes Co or generate 29.68% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Baker Hughes Co vs. Endeavour Mining PLC
Performance |
Timeline |
Baker Hughes |
Endeavour Mining PLC |
Baker Hughes and Endeavour Mining Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Baker Hughes and Endeavour Mining
The main advantage of trading using opposite Baker Hughes and Endeavour Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baker Hughes position performs unexpectedly, Endeavour Mining 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 Endeavour Mining will offset losses from the drop in Endeavour Mining's long position.Baker Hughes vs. DXC Technology Co | ||
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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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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