Correlation Between Baker Hughes and Schlumberger

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

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

Diversification Opportunities for Baker Hughes and Schlumberger

0.39

Correlation Coefficient

Baker Hughes  Schlumberger

Weak diversification

The 3 months correlation between Baker and Schlumberger is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Baker Hughes Co and Schlumberger NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schlumberger NV and Baker Hughes 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 Baker Hughes Co are associated (or correlated) with Schlumberger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schlumberger NV has no effect on the direction of Baker Hughes i.e., Baker Hughes and Schlumberger go up and down completely randomly.

Pair Corralation between Baker Hughes and Schlumberger

Considering the 90-day investment horizon Baker Hughes Co is expected to generate 1.03 times more return on investment than Schlumberger. However, Baker Hughes is 1.03 times more volatile than Schlumberger NV. It trades about 0.16 of its potential returns per unit of risk. Schlumberger NV is currently generating about 0.0 per unit of risk. If you would invest  3,631  in Baker Hughes Co on May 7, 2025 and sell it today you would earn a total of  744.00  from holding Baker Hughes Co or generate 20.49% return on investment over 90 days.

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

Baker Hughes Co  vs.  Schlumberger NV

Baker Hughes

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Baker Hughes Co are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting forward-looking signals, Baker Hughes reported solid returns over the last few months and may actually be approaching a breakup point.

Schlumberger NV

Risk-Adjusted Performance

Very Weak

Over the last 90 days Schlumberger NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong essential indicators, Schlumberger is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Baker Hughes and Schlumberger

The main advantage of trading using opposite Baker Hughes and Schlumberger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baker Hughes position performs unexpectedly, Schlumberger 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 Schlumberger will offset losses from the drop in Schlumberger's long position.

The idea behind Baker Hughes Co and Schlumberger NV 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.