Correlation Between Ford and Baker Hughes
Can any of the company-specific risk be diversified away by investing in both Ford 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 Ford and Baker Hughes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Baker Hughes, you can compare the effects of market volatilities on Ford 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 Ford with a short position of Baker Hughes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Baker Hughes.
Diversification Opportunities for Ford and Baker Hughes
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Ford and Baker is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Baker Hughes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baker Hughes and Ford 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 Ford Motor 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 Ford i.e., Ford and Baker Hughes go up and down completely randomly.
Pair Corralation between Ford and Baker Hughes
If you would invest 926.00 in Ford Motor on September 18, 2024 and sell it today you would earn a total of 73.00 from holding Ford Motor or generate 7.88% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Flat |
Strength | Insignificant |
Accuracy | 0.0% |
Values | Daily Returns |
Ford Motor vs. Baker Hughes
Performance |
Timeline |
Ford Motor |
Baker Hughes |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Ford and Baker Hughes Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Ford and Baker Hughes
The main advantage of trading using opposite Ford and Baker Hughes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford 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 Ford Motor and Baker Hughes 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.Baker Hughes vs. Cebu Air ADR | Baker Hughes vs. Entravision Communications | Baker Hughes vs. Westinghouse Air Brake | Baker Hughes vs. Dolphin Entertainment |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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