Correlation Between Solaris Oilfield and Baker Hughes

Can any of the company-specific risk be diversified away by investing in both Solaris Oilfield 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 Solaris Oilfield and Baker Hughes into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Solaris Oilfield Infrastructure and Baker Hughes Co, you can compare the effects of market volatilities on Solaris Oilfield 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 Solaris Oilfield with a short position of Baker Hughes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solaris Oilfield and Baker Hughes.

Diversification Opportunities for Solaris Oilfield and Baker Hughes

0.56

Correlation Coefficient

Solaris Oilfield  Baker Hughes

Very weak diversification

The 3 months correlation between Solaris and Baker is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Solaris Oilfield Infrastructur and Baker Hughes Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baker Hughes and Solaris Oilfield 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 Solaris Oilfield Infrastructure 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 Solaris Oilfield i.e., Solaris Oilfield and Baker Hughes go up and down completely randomly.

Pair Corralation between Solaris Oilfield and Baker Hughes

If you would invest  1,152  in Solaris Oilfield Infrastructure on September 23, 2024 and sell it today you would earn a total of  0.00  from holding Solaris Oilfield Infrastructure or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	4.76%
Values	Daily Returns

Solaris Oilfield Infrastructur  vs.  Baker Hughes Co

Solaris Oilfield Inf

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Solaris Oilfield Infrastructure has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Solaris Oilfield is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Baker Hughes

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Baker Hughes Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain forward-looking signals, Baker Hughes may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Solaris Oilfield and Baker Hughes

The main advantage of trading using opposite Solaris Oilfield and Baker Hughes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solaris Oilfield 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.

The idea behind Solaris Oilfield Infrastructure and Baker Hughes Co 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.