Correlation Between Fiserv and Baker Hughes
Can any of the company-specific risk be diversified away by investing in both Fiserv 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 Fiserv and Baker Hughes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fiserv Inc and Baker Hughes Co, you can compare the effects of market volatilities on Fiserv 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 Fiserv with a short position of Baker Hughes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fiserv and Baker Hughes.
Diversification Opportunities for Fiserv and Baker Hughes
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fiserv and Baker is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Fiserv 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 Fiserv 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 Fiserv 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 Fiserv i.e., Fiserv and Baker Hughes go up and down completely randomly.
Pair Corralation between Fiserv and Baker Hughes
Allowing for the 90-day total investment horizon Fiserv Inc is expected to generate 1.13 times more return on investment than Baker Hughes. However, Fiserv is 1.13 times more volatile than Baker Hughes Co. It trades about 0.19 of its potential returns per unit of risk. Baker Hughes Co is currently generating about 0.12 per unit of risk. If you would invest 14,640 in Fiserv Inc on February 16, 2024 and sell it today you would earn a total of 866.00 from holding Fiserv Inc or generate 5.92% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Fiserv Inc vs. Baker Hughes Co
Performance |
Timeline |
Fiserv Inc |
Baker Hughes |
Fiserv and Baker Hughes Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Fiserv and Baker Hughes
The main advantage of trading using opposite Fiserv and Baker Hughes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fiserv 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.Fiserv vs. Concentrix | Fiserv vs. International Business Machines | Fiserv vs. ASGN Inc | Fiserv vs. CACI International |
Baker Hughes vs. Expro Group Holdings | Baker Hughes vs. Ranger Energy Services | Baker Hughes vs. MRC Global | Baker Hughes vs. Now Inc |
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 CEOs Directory module to screen CEOs from public companies around the world.
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