Correlation Between Halliburton and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Halliburton and Dow Jones 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 Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Halliburton and Dow Jones Industrial, you can compare the effects of market volatilities on Halliburton and Dow Jones 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 Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Halliburton and Dow Jones.
Diversification Opportunities for Halliburton and Dow Jones
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Halliburton and Dow is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Halliburton and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial 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 Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Halliburton i.e., Halliburton and Dow Jones go up and down completely randomly.
Pair Corralation between Halliburton and Dow Jones
Considering the 90-day investment horizon Halliburton is expected to generate 2.1 times more return on investment than Dow Jones. However, Halliburton is 2.1 times more volatile than Dow Jones Industrial. It trades about 0.32 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.22 per unit of risk. If you would invest 2,789 in Halliburton on August 27, 2024 and sell it today you would earn a total of 405.00 from holding Halliburton or generate 14.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Halliburton vs. Dow Jones Industrial
Performance |
| Timeline |
Halliburton and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Halliburton
Pair trading matchups for Halliburton
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Halliburton and Dow Jones
The main advantage of trading using opposite Halliburton and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Halliburton position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Halliburton vs. Baker Hughes Co | Halliburton vs. NOV Inc | Halliburton vs. Tenaris SA ADR | Halliburton vs. Weatherford International PLC |
| Dow Jones vs. Meiwu Technology Co | Dow Jones vs. 17 Education Technology | Dow Jones vs. 51Talk Online Education | Dow Jones vs. Afya |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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