Correlation Between Tenaris SA and Baker Hughes
Can any of the company-specific risk be diversified away by investing in both Tenaris SA 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 Tenaris SA and Baker Hughes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tenaris SA ADR and Baker Hughes Co, you can compare the effects of market volatilities on Tenaris SA 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 Tenaris SA with a short position of Baker Hughes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tenaris SA and Baker Hughes.
Diversification Opportunities for Tenaris SA and Baker Hughes
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Tenaris and Baker is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Tenaris SA ADR and Baker Hughes Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baker Hughes and Tenaris SA 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 Tenaris SA ADR 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 Tenaris SA i.e., Tenaris SA and Baker Hughes go up and down completely randomly.
Pair Corralation between Tenaris SA and Baker Hughes
Allowing for the 90-day total investment horizon Tenaris SA ADR is expected to under-perform the Baker Hughes. In addition to that, Tenaris SA is 1.38 times more volatile than Baker Hughes Co. It trades about -0.31 of its total potential returns per unit of risk. Baker Hughes Co is currently generating about -0.15 per unit of volatility. If you would invest 3,399 in Baker Hughes Co on February 11, 2024 and sell it today you would lose (165.00) from holding Baker Hughes Co or give up 4.85% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Tenaris SA ADR vs. Baker Hughes Co
Performance |
Timeline |
Tenaris SA ADR |
Baker Hughes |
Tenaris SA and Baker Hughes Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Tenaris SA and Baker Hughes
The main advantage of trading using opposite Tenaris SA and Baker Hughes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tenaris SA 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.Tenaris SA vs. TechnipFMC PLC | Tenaris SA vs. Now Inc | Tenaris SA vs. ChampionX | Tenaris SA vs. Baker Hughes Co |
Baker Hughes vs. Expro Group Holdings | Baker Hughes vs. Ranger Energy Services | Baker Hughes vs. MRC Global | Baker Hughes vs. Bristow Group |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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