Correlation Between NorAm Drilling and Halliburton
Can any of the company-specific risk be diversified away by investing in both NorAm Drilling 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 NorAm Drilling and Halliburton into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NorAm Drilling AS and Halliburton, you can compare the effects of market volatilities on NorAm Drilling 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 NorAm Drilling with a short position of Halliburton. Check out your portfolio center. Please also check ongoing floating volatility patterns of NorAm Drilling and Halliburton.
Diversification Opportunities for NorAm Drilling and Halliburton
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between NorAm and Halliburton is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding NorAm Drilling AS and Halliburton in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Halliburton and NorAm Drilling 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 NorAm Drilling AS 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 NorAm Drilling i.e., NorAm Drilling and Halliburton go up and down completely randomly.
Pair Corralation between NorAm Drilling and Halliburton
Assuming the 90 days horizon NorAm Drilling AS is expected to generate 2.38 times more return on investment than Halliburton. However, NorAm Drilling is 2.38 times more volatile than Halliburton. It trades about 0.01 of its potential returns per unit of risk. Halliburton is currently generating about -0.06 per unit of risk. If you would invest 332.00 in NorAm Drilling AS on September 4, 2024 and sell it today you would lose (42.00) from holding NorAm Drilling AS or give up 12.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.24% |
| Values | Daily Returns |
NorAm Drilling AS vs. Halliburton
Performance |
| Timeline |
| NorAm Drilling AS |
| Halliburton |
NorAm Drilling and Halliburton Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NorAm Drilling and Halliburton
The main advantage of trading using opposite NorAm Drilling and Halliburton positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NorAm Drilling 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.| NorAm Drilling vs. AUTO TRADER ADR | NorAm Drilling vs. IDP EDUCATION LTD | NorAm Drilling vs. Perdoceo Education | NorAm Drilling vs. Strategic Education |
| Halliburton vs. Superior Plus Corp | Halliburton vs. NMI Holdings | Halliburton vs. Origin Agritech | Halliburton vs. SIVERS SEMICONDUCTORS AB |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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