Correlation Between Schlumberger and Halliburton
Can any of the company-specific risk be diversified away by investing in both Schlumberger 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 Schlumberger and Halliburton into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Schlumberger Limited and Halliburton, you can compare the effects of market volatilities on Schlumberger 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 Schlumberger with a short position of Halliburton. Check out your portfolio center. Please also check ongoing floating volatility patterns of Schlumberger and Halliburton.
Diversification Opportunities for Schlumberger and Halliburton
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Schlumberger and Halliburton is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Schlumberger Limited and Halliburton in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Halliburton and Schlumberger 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 Schlumberger Limited 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 Schlumberger i.e., Schlumberger and Halliburton go up and down completely randomly.
Pair Corralation between Schlumberger and Halliburton
Assuming the 90 days horizon Schlumberger is expected to generate 1.66 times less return on investment than Halliburton. In addition to that, Schlumberger is 1.07 times more volatile than Halliburton. It trades about 0.16 of its total potential returns per unit of risk. Halliburton is currently generating about 0.29 per unit of volatility. If you would invest 2,562 in Halliburton on August 29, 2024 and sell it today you would earn a total of 471.00 from holding Halliburton or generate 18.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Schlumberger Limited vs. Halliburton
Performance |
| Timeline |
| Schlumberger Limited |
| Halliburton |
Schlumberger and Halliburton Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Schlumberger and Halliburton
The main advantage of trading using opposite Schlumberger and Halliburton positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Schlumberger 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.| Schlumberger vs. QURATE RETAIL INC | Schlumberger vs. Cal Maine Foods | Schlumberger vs. TYSON FOODS A | Schlumberger vs. PT Indofood Sukses |
| Halliburton vs. Public Storage | Halliburton vs. Pure Storage | Halliburton vs. Hyrican Informationssysteme Aktiengesellschaft | Halliburton vs. DOCDATA |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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