Correlation Between Halliburton and American Express
Can any of the company-specific risk be diversified away by investing in both Halliburton and American Express 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 Halliburton and American Express into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Halliburton Co and American Express Co, you can compare the effects of market volatilities on Halliburton and American Express 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 Halliburton with a short position of American Express. Check out your portfolio center. Please also check ongoing floating volatility patterns of Halliburton and American Express.
Diversification Opportunities for Halliburton and American Express
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Halliburton and American is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Halliburton Co and American Express Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Express and Halliburton 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 Halliburton Co are associated (or correlated) with American Express. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Express has no effect on the direction of Halliburton i.e., Halliburton and American Express go up and down completely randomly.
Pair Corralation between Halliburton and American Express
Assuming the 90 days trading horizon Halliburton is expected to generate 1.57 times less return on investment than American Express. In addition to that, Halliburton is 1.15 times more volatile than American Express Co. It trades about 0.09 of its total potential returns per unit of risk. American Express Co is currently generating about 0.17 per unit of volatility. If you would invest 569,950 in American Express Co on August 31, 2024 and sell it today you would earn a total of 1,690,050 from holding American Express Co or generate 296.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.73% |
| Values | Daily Returns |
Halliburton Co vs. American Express Co
Performance |
| Timeline |
| Halliburton |
| American Express |
Halliburton and American Express Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Halliburton and American Express
The main advantage of trading using opposite Halliburton and American Express positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Halliburton position performs unexpectedly, American Express 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 American Express will offset losses from the drop in American Express' long position.| Halliburton vs. Edesa Holding SA | Halliburton vs. Longvie SA | Halliburton vs. American Express Co | Halliburton vs. United States Steel |
| American Express vs. Agrometal SAI | American Express vs. Harmony Gold Mining | American Express vs. Transportadora de Gas | American Express vs. Compania de Transporte |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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