Correlation Between Weatherford International and Halliburton
Can any of the company-specific risk be diversified away by investing in both Weatherford International 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 Weatherford International and Halliburton into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Weatherford International PLC and Halliburton, you can compare the effects of market volatilities on Weatherford International 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 Weatherford International with a short position of Halliburton. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weatherford International and Halliburton.
Diversification Opportunities for Weatherford International and Halliburton
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Weatherford and Halliburton is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Weatherford International PLC and Halliburton in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Halliburton and Weatherford International 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 Weatherford International PLC 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 Weatherford International i.e., Weatherford International and Halliburton go up and down completely randomly.
Pair Corralation between Weatherford International and Halliburton
Given the investment horizon of 90 days Weatherford International is expected to generate 2.15 times less return on investment than Halliburton. In addition to that, Weatherford International is 1.47 times more volatile than Halliburton. It trades about 0.1 of its total potential returns per unit of risk. Halliburton is currently generating about 0.32 per unit of volatility. If you would invest 2,789 in Halliburton on August 27, 2024 and sell it today you would earn a total of 405.00 from holding Halliburton or generate 14.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Weatherford International PLC vs. Halliburton
Performance |
| Timeline |
| Weatherford International |
| Halliburton |
Weatherford International and Halliburton Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Weatherford International and Halliburton
The main advantage of trading using opposite Weatherford International and Halliburton positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weatherford International 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.| Weatherford International vs. ProPetro Holding Corp | Weatherford International vs. RPC Inc | Weatherford International vs. MRC Global | Weatherford International vs. Expro Group Holdings |
| Halliburton vs. Baker Hughes Co | Halliburton vs. NOV Inc | Halliburton vs. Tenaris SA ADR | Halliburton vs. Weatherford International PLC |
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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