Correlation Between Halliburton and Weatherford International
Can any of the company-specific risk be diversified away by investing in both Halliburton and Weatherford International 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 Weatherford International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Halliburton and Weatherford International PLC, you can compare the effects of market volatilities on Halliburton and Weatherford International 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 Weatherford International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Halliburton and Weatherford International.
Diversification Opportunities for Halliburton and Weatherford International
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Halliburton and Weatherford is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Halliburton and Weatherford International PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weatherford International 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 Weatherford International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Weatherford International has no effect on the direction of Halliburton i.e., Halliburton and Weatherford International go up and down completely randomly.
Pair Corralation between Halliburton and Weatherford International
Considering the 90-day investment horizon Halliburton is expected to generate 0.68 times more return on investment than Weatherford International. However, Halliburton is 1.48 times less risky than Weatherford International. It trades about 0.33 of its potential returns per unit of risk. Weatherford International PLC is currently generating about 0.1 per unit of risk. If you would invest 2,789 in Halliburton on August 28, 2024 and sell it today you would earn a total of 410.00 from holding Halliburton or generate 14.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Halliburton vs. Weatherford International PLC
Performance |
| Timeline |
| Halliburton |
| Weatherford International |
Halliburton and Weatherford International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Halliburton and Weatherford International
The main advantage of trading using opposite Halliburton and Weatherford International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Halliburton position performs unexpectedly, Weatherford International 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 Weatherford International will offset losses from the drop in Weatherford International's long position.| Halliburton vs. Baker Hughes Co | Halliburton vs. NOV Inc | Halliburton vs. Tenaris SA ADR | Halliburton vs. Weatherford International PLC |
| Weatherford International vs. ProPetro Holding Corp | Weatherford International vs. RPC Inc | Weatherford International vs. MRC Global | Weatherford International vs. Expro Group Holdings |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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