Correlation Between ONEOK and Baker Hughes

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

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

Diversification Opportunities for ONEOK and Baker Hughes

0.94

Correlation Coefficient

ONEOK  Baker Hughes

Almost no diversification

The 3 months correlation between ONEOK and Baker is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding ONEOK Inc and Baker Hughes Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baker Hughes and ONEOK 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 ONEOK Inc 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 ONEOK i.e., ONEOK and Baker Hughes go up and down completely randomly.

Pair Corralation between ONEOK and Baker Hughes

Assuming the 90 days trading horizon ONEOK Inc is expected to under-perform the Baker Hughes. But the stock apears to be less risky and, when comparing its historical volatility, ONEOK Inc is 1.15 times less risky than Baker Hughes. The stock trades about -0.32 of its potential returns per unit of risk. The Baker Hughes Co is currently generating about -0.16 of returns per unit of risk over similar time horizon. If you would invest  4,325  in Baker Hughes Co on September 27, 2024 and sell it today you would lose (246.00) from holding Baker Hughes Co or give up 5.69% of portfolio value over 90 days.

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

ONEOK Inc  vs.  Baker Hughes Co

ONEOK Inc

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ONEOK Inc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, ONEOK unveiled solid returns over the last few months and may actually be approaching a breakup point.

Baker Hughes

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Baker Hughes Co are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Baker Hughes unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ONEOK and Baker Hughes

The main advantage of trading using opposite ONEOK and Baker Hughes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ONEOK 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 ONEOK Inc 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.