Correlation Between Halliburton and FibraHotel
Can any of the company-specific risk be diversified away by investing in both Halliburton and FibraHotel 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 FibraHotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Halliburton and FibraHotel, you can compare the effects of market volatilities on Halliburton and FibraHotel 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 FibraHotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Halliburton and FibraHotel.
Diversification Opportunities for Halliburton and FibraHotel
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Halliburton and FibraHotel is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Halliburton and FibraHotel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FibraHotel 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 are associated (or correlated) with FibraHotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FibraHotel has no effect on the direction of Halliburton i.e., Halliburton and FibraHotel go up and down completely randomly.
Pair Corralation between Halliburton and FibraHotel
Assuming the 90 days trading horizon Halliburton is expected to under-perform the FibraHotel. In addition to that, Halliburton is 2.38 times more volatile than FibraHotel. It trades about -0.07 of its total potential returns per unit of risk. FibraHotel is currently generating about -0.07 per unit of volatility. If you would invest 905.00 in FibraHotel on September 13, 2024 and sell it today you would lose (21.00) from holding FibraHotel or give up 2.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Halliburton vs. FibraHotel
Performance |
| Timeline |
| Halliburton |
| FibraHotel |
Halliburton and FibraHotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Halliburton and FibraHotel
The main advantage of trading using opposite Halliburton and FibraHotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Halliburton position performs unexpectedly, FibraHotel 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 FibraHotel will offset losses from the drop in FibraHotel's long position.| Halliburton vs. Hoteles City Express | Halliburton vs. Grupo Sports World | Halliburton vs. UnitedHealth Group Incorporated | Halliburton vs. GMxico Transportes SAB |
| FibraHotel vs. DXC Technology | FibraHotel vs. New Oriental Education | FibraHotel vs. Monster Beverage Corp | FibraHotel vs. Martin Marietta Materials |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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