Correlation Between NOV and Halliburton
Can any of the company-specific risk be diversified away by investing in both NOV and Halliburton 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 NOV and Halliburton into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NOV Inc and Halliburton, you can compare the effects of market volatilities on NOV and Halliburton 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 NOV with a short position of Halliburton. Check out your portfolio center. Please also check ongoing floating volatility patterns of NOV and Halliburton.
Diversification Opportunities for NOV and Halliburton
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NOV and Halliburton is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding NOV Inc and Halliburton in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Halliburton and NOV 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 NOV Inc are associated (or correlated) with Halliburton. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Halliburton has no effect on the direction of NOV i.e., NOV and Halliburton go up and down completely randomly.
Pair Corralation between NOV and Halliburton
Assuming the 90 days horizon NOV is expected to generate 1.61 times less return on investment than Halliburton. But when comparing it to its historical volatility, NOV Inc is 1.06 times less risky than Halliburton. It trades about 0.21 of its potential returns per unit of risk. Halliburton is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 2,573 in Halliburton on August 28, 2024 and sell it today you would earn a total of 464.00 from holding Halliburton or generate 18.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
NOV Inc vs. Halliburton
Performance |
| Timeline |
| NOV Inc |
| Halliburton |
NOV and Halliburton Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NOV and Halliburton
The main advantage of trading using opposite NOV and Halliburton positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NOV position performs unexpectedly, Halliburton 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 Halliburton will offset losses from the drop in Halliburton's long position.| NOV vs. AEGEAN AIRLINES | NOV vs. Southwest Airlines Co | NOV vs. SINGAPORE AIRLINES | NOV vs. Treasury Wine Estates |
| Halliburton vs. SCANDMEDICAL SOLDK 040 | Halliburton vs. Apyx Medical Corp | Halliburton vs. COSTCO WHOLESALE CDR | Halliburton vs. Burlington Stores |
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 Stocks Directory module to find actively traded stocks across global markets.
Other Complementary Tools
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Stocks Directory Find actively traded stocks across global markets | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes |