Correlation Between BAKER and One Liberty

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Can any of the company-specific risk be diversified away by investing in both BAKER and One Liberty 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 and One Liberty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BAKER HUGHES A and One Liberty Properties, you can compare the effects of market volatilities on BAKER and One Liberty 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 with a short position of One Liberty. Check out your portfolio center. Please also check ongoing floating volatility patterns of BAKER and One Liberty.

Diversification Opportunities for BAKER and One Liberty

-0.11
  Correlation Coefficient

Good diversification

The 3 months correlation between BAKER and One is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding BAKER HUGHES A and One Liberty Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on One Liberty Properties and BAKER 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 A are associated (or correlated) with One Liberty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of One Liberty Properties has no effect on the direction of BAKER i.e., BAKER and One Liberty go up and down completely randomly.

Pair Corralation between BAKER and One Liberty

Assuming the 90 days trading horizon BAKER HUGHES A is expected to under-perform the One Liberty. But the bond apears to be less risky and, when comparing its historical volatility, BAKER HUGHES A is 3.81 times less risky than One Liberty. The bond trades about 0.0 of its potential returns per unit of risk. The One Liberty Properties is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  2,036  in One Liberty Properties on October 4, 2024 and sell it today you would earn a total of  648.00  from holding One Liberty Properties or generate 31.83% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy99.19%
ValuesDaily Returns

BAKER HUGHES A  vs.  One Liberty Properties

 Performance 
       Timeline  
BAKER HUGHES A 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days BAKER HUGHES A has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, BAKER is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
One Liberty Properties 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in One Liberty Properties are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable essential indicators, One Liberty is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

BAKER and One Liberty Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with BAKER and One Liberty

The main advantage of trading using opposite BAKER and One Liberty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BAKER position performs unexpectedly, One Liberty 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 One Liberty will offset losses from the drop in One Liberty's long position.
The idea behind BAKER HUGHES A and One Liberty Properties 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.

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