Correlation Between MRC Global and Baker Hughes
Can any of the company-specific risk be diversified away by investing in both MRC Global 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 MRC Global and Baker Hughes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MRC Global and Baker Hughes Co, you can compare the effects of market volatilities on MRC Global 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 MRC Global with a short position of Baker Hughes. Check out your portfolio center. Please also check ongoing floating volatility patterns of MRC Global and Baker Hughes.
Diversification Opportunities for MRC Global and Baker Hughes
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between MRC and Baker is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding MRC Global and Baker Hughes Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baker Hughes and MRC Global 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 MRC Global 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 MRC Global i.e., MRC Global and Baker Hughes go up and down completely randomly.
Pair Corralation between MRC Global and Baker Hughes
Considering the 90-day investment horizon MRC Global is expected to generate 1.6 times more return on investment than Baker Hughes. However, MRC Global is 1.6 times more volatile than Baker Hughes Co. It trades about 0.11 of its potential returns per unit of risk. Baker Hughes Co is currently generating about 0.11 per unit of risk. If you would invest 1,170 in MRC Global on February 23, 2024 and sell it today you would earn a total of 167.00 from holding MRC Global or generate 14.27% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 98.46% |
Values | Daily Returns |
MRC Global vs. Baker Hughes Co
Performance |
Timeline |
MRC Global |
Baker Hughes |
MRC Global and Baker Hughes Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with MRC Global and Baker Hughes
The main advantage of trading using opposite MRC Global and Baker Hughes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MRC Global 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.MRC Global vs. Dril Quip | MRC Global vs. NOV Inc | MRC Global vs. Solaris Oilfield Infrastructure | MRC Global vs. Ranger Energy Services |
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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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