Correlation Between Worley Parsons and Baker Hughes

Can any of the company-specific risk be diversified away by investing in both Worley Parsons 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 Worley Parsons and Baker Hughes into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Worley Parsons and Baker Hughes Co, you can compare the effects of market volatilities on Worley Parsons 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 Worley Parsons with a short position of Baker Hughes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Worley Parsons and Baker Hughes.

Diversification Opportunities for Worley Parsons and Baker Hughes

0.66

Correlation Coefficient

Worley Parsons  Baker Hughes

Poor diversification

The 3 months correlation between Worley and Baker is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Worley Parsons and Baker Hughes Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baker Hughes and Worley Parsons 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 Worley Parsons 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 Worley Parsons i.e., Worley Parsons and Baker Hughes go up and down completely randomly.

Pair Corralation between Worley Parsons and Baker Hughes

Assuming the 90 days horizon Worley Parsons is expected to under-perform the Baker Hughes. In addition to that, Worley Parsons is 2.05 times more volatile than Baker Hughes Co. It trades about -0.15 of its total potential returns per unit of risk. Baker Hughes Co is currently generating about -0.09 per unit of volatility. If you would invest  3,344  in Baker Hughes Co on February 1, 2024 and sell it today you would lose (82.00) from holding Baker Hughes Co or give up 2.45% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Worley Parsons  vs.  Baker Hughes Co

Worley Parsons

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Worley Parsons are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Worley Parsons is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Baker Hughes

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Baker Hughes Co are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal forward-looking signals, Baker Hughes reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Worley Parsons and Baker Hughes

The main advantage of trading using opposite Worley Parsons and Baker Hughes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Worley Parsons 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 Worley Parsons and Baker Hughes Co 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..