Correlation Between Oil States and Halliburton
Can any of the company-specific risk be diversified away by investing in both Oil States 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 Oil States and Halliburton into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oil States International and Halliburton, you can compare the effects of market volatilities on Oil States 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 Oil States with a short position of Halliburton. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oil States and Halliburton.
Diversification Opportunities for Oil States and Halliburton
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Oil and Halliburton is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Oil States International and Halliburton in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Halliburton and Oil States 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 Oil States International 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 Oil States i.e., Oil States and Halliburton go up and down completely randomly.
Pair Corralation between Oil States and Halliburton
Considering the 90-day investment horizon Oil States International is expected to generate 1.83 times more return on investment than Halliburton. However, Oil States is 1.83 times more volatile than Halliburton. It trades about 0.36 of its potential returns per unit of risk. Halliburton is currently generating about 0.28 per unit of risk. If you would invest 431.00 in Oil States International on August 26, 2024 and sell it today you would earn a total of 141.00 from holding Oil States International or generate 32.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Oil States International vs. Halliburton
Performance |
| Timeline |
| Oil States International |
| Halliburton |
Oil States and Halliburton Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oil States and Halliburton
The main advantage of trading using opposite Oil States and Halliburton positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oil States 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.| Oil States vs. Oceaneering International | Oil States vs. ChampionX | Oil States vs. TechnipFMC PLC | Oil States vs. Helix Energy Solutions |
| Halliburton vs. ProPetro Holding Corp | Halliburton vs. RPC Inc | Halliburton vs. MRC Global | Halliburton vs. Oil States International |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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