Correlation Between Halliburton and Forum Energy
Can any of the company-specific risk be diversified away by investing in both Halliburton and Forum Energy 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 Forum Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Halliburton and Forum Energy Technologies, you can compare the effects of market volatilities on Halliburton and Forum Energy 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 Forum Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Halliburton and Forum Energy.
Diversification Opportunities for Halliburton and Forum Energy
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Halliburton and Forum is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Halliburton and Forum Energy Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Forum Energy Technologies 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 Forum Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Forum Energy Technologies has no effect on the direction of Halliburton i.e., Halliburton and Forum Energy go up and down completely randomly.
Pair Corralation between Halliburton and Forum Energy
Considering the 90-day investment horizon Halliburton is expected to under-perform the Forum Energy. But the stock apears to be less risky and, when comparing its historical volatility, Halliburton is 1.76 times less risky than Forum Energy. The stock trades about -0.12 of its potential returns per unit of risk. The Forum Energy Technologies is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 1,549 in Forum Energy Technologies on September 13, 2024 and sell it today you would lose (52.00) from holding Forum Energy Technologies or give up 3.36% 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. Forum Energy Technologies
Performance |
| Timeline |
| Halliburton |
| Forum Energy Technologies |
Halliburton and Forum Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Halliburton and Forum Energy
The main advantage of trading using opposite Halliburton and Forum Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Halliburton position performs unexpectedly, Forum Energy 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 Forum Energy will offset losses from the drop in Forum Energy's long position.| Halliburton vs. Baker Hughes Co | Halliburton vs. NOV Inc | Halliburton vs. Tenaris SA ADR | Halliburton vs. Weatherford International PLC |
| Forum Energy vs. Natural Gas Services | Forum Energy vs. Enerflex | Forum Energy vs. Now Inc | Forum Energy vs. Newpark Resources |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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