Correlation Between Enterprise and Halliburton
Can any of the company-specific risk be diversified away by investing in both Enterprise and Halliburton 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 Enterprise and Halliburton into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enterprise Group and Halliburton, you can compare the effects of market volatilities on Enterprise and Halliburton 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 Enterprise with a short position of Halliburton. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enterprise and Halliburton.
Diversification Opportunities for Enterprise and Halliburton
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Enterprise and Halliburton is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Enterprise Group and Halliburton in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Halliburton and Enterprise 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 Enterprise Group are associated (or correlated) with Halliburton. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Halliburton has no effect on the direction of Enterprise i.e., Enterprise and Halliburton go up and down completely randomly.
Pair Corralation between Enterprise and Halliburton
Assuming the 90 days horizon Enterprise Group is expected to generate 2.6 times more return on investment than Halliburton. However, Enterprise is 2.6 times more volatile than Halliburton. It trades about 0.09 of its potential returns per unit of risk. Halliburton is currently generating about -0.07 per unit of risk. If you would invest 90.00 in Enterprise Group on September 3, 2024 and sell it today you would earn a total of 60.00 from holding Enterprise Group or generate 66.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Enterprise Group vs. Halliburton
Performance |
| Timeline |
| Enterprise Group |
| Halliburton |
Enterprise and Halliburton Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enterprise and Halliburton
The main advantage of trading using opposite Enterprise and Halliburton positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enterprise position performs unexpectedly, Halliburton 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 Halliburton will offset losses from the drop in Halliburton's long position.| Enterprise vs. Bri Chem Corp | Enterprise vs. High Arctic Energy | Enterprise vs. CES Energy Solutions | Enterprise vs. Mccoy Global |
| Halliburton vs. Baker Hughes Co | Halliburton vs. NOV Inc | Halliburton vs. Tenaris SA ADR | Halliburton vs. Weatherford International PLC |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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