Correlation Between Halliburton and Norsk Hydro
Can any of the company-specific risk be diversified away by investing in both Halliburton and Norsk Hydro 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 Norsk Hydro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Halliburton and Norsk Hydro ASA, you can compare the effects of market volatilities on Halliburton and Norsk Hydro 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 Norsk Hydro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Halliburton and Norsk Hydro.
Diversification Opportunities for Halliburton and Norsk Hydro
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Halliburton and Norsk is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Halliburton and Norsk Hydro ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Norsk Hydro ASA 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 Norsk Hydro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Norsk Hydro ASA has no effect on the direction of Halliburton i.e., Halliburton and Norsk Hydro go up and down completely randomly.
Pair Corralation between Halliburton and Norsk Hydro
Assuming the 90 days trading horizon Halliburton is expected to generate 0.74 times more return on investment than Norsk Hydro. However, Halliburton is 1.34 times less risky than Norsk Hydro. It trades about 0.3 of its potential returns per unit of risk. Norsk Hydro ASA is currently generating about 0.03 per unit of risk. If you would invest 2,577 in Halliburton on September 4, 2024 and sell it today you would earn a total of 438.00 from holding Halliburton or generate 17.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Halliburton vs. Norsk Hydro ASA
Performance |
| Timeline |
| Halliburton |
| Norsk Hydro ASA |
Halliburton and Norsk Hydro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Halliburton and Norsk Hydro
The main advantage of trading using opposite Halliburton and Norsk Hydro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Halliburton position performs unexpectedly, Norsk Hydro 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 Norsk Hydro will offset losses from the drop in Norsk Hydro's long position.| Halliburton vs. Superior Plus Corp | Halliburton vs. NMI Holdings | Halliburton vs. Origin Agritech | Halliburton vs. SIVERS SEMICONDUCTORS AB |
| Norsk Hydro vs. Consolidated Communications Holdings | Norsk Hydro vs. Laureate Education | Norsk Hydro vs. Ribbon Communications | Norsk Hydro vs. Entravision Communications |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
Other Complementary Tools
| Transaction History View history of all your transactions and understand their impact on performance | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes |