Correlation Between Phillips and Baker Hughes

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Can any of the company-specific risk be diversified away by investing in both Phillips 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 Phillips and Baker Hughes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Phillips 66 and Baker Hughes, you can compare the effects of market volatilities on Phillips 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 Phillips with a short position of Baker Hughes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Phillips and Baker Hughes.

Diversification Opportunities for Phillips and Baker Hughes

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Phillips and Baker is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Phillips 66 and Baker Hughes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baker Hughes and Phillips 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 Phillips 66 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 Phillips i.e., Phillips and Baker Hughes go up and down completely randomly.

Pair Corralation between Phillips and Baker Hughes

If you would invest  14,534  in Phillips 66 on December 29, 2023 and sell it today you would earn a total of  1,362  from holding Phillips 66 or generate 9.37% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

Phillips 66  vs.  Baker Hughes

 Performance 
       Timeline  
Phillips 66 

Risk-Adjusted Performance

18 of 100

 
Low
 
High
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Phillips 66 are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Phillips showed solid returns over the last few months and may actually be approaching a breakup point.
Baker Hughes 

Risk-Adjusted Performance

0 of 100

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

Phillips and Baker Hughes Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Phillips and Baker Hughes

The main advantage of trading using opposite Phillips and Baker Hughes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Phillips 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 Phillips 66 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.
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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.

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