Correlation Between Archrock and Baker Hughes
Can any of the company-specific risk be diversified away by investing in both Archrock 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 Archrock and Baker Hughes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Archrock and Baker Hughes Co, you can compare the effects of market volatilities on Archrock 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 Archrock with a short position of Baker Hughes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Archrock and Baker Hughes.
Diversification Opportunities for Archrock and Baker Hughes
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Archrock and Baker is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Archrock and Baker Hughes Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baker Hughes and Archrock 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 Archrock 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 has no effect on the direction of Archrock i.e., Archrock and Baker Hughes go up and down completely randomly.
Pair Corralation between Archrock and Baker Hughes
Given the investment horizon of 90 days Archrock is expected to generate 1.74 times more return on investment than Baker Hughes. However, Archrock is 1.74 times more volatile than Baker Hughes Co. It trades about -0.09 of its potential returns per unit of risk. Baker Hughes Co is currently generating about -0.31 per unit of risk. If you would invest 2,586 in Archrock on September 23, 2024 and sell it today you would lose (131.00) from holding Archrock or give up 5.07% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Archrock vs. Baker Hughes Co
Performance |
Timeline |
Archrock |
Baker Hughes |
Archrock and Baker Hughes Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Archrock and Baker Hughes
The main advantage of trading using opposite Archrock and Baker Hughes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Archrock 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.Archrock vs. RPC Inc | Archrock vs. Oceaneering International | Archrock vs. Valaris | Archrock vs. Geospace Technologies |
Baker Hughes vs. RPC Inc | Baker Hughes vs. Oceaneering International | Baker Hughes vs. Valaris | Baker Hughes vs. Geospace Technologies |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
Other Complementary Tools
Share Portfolio Track or share privately all of your investments from the convenience of any device | |
Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
Bonds Directory Find actively traded corporate debentures issued by US companies | |
Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals |