Correlation Between Cactus and Halliburton
Can any of the company-specific risk be diversified away by investing in both Cactus 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 Cactus and Halliburton into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cactus Inc and Halliburton, you can compare the effects of market volatilities on Cactus 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 Cactus with a short position of Halliburton. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cactus and Halliburton.
Diversification Opportunities for Cactus and Halliburton
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Cactus and Halliburton is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Cactus Inc and Halliburton in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Halliburton and Cactus 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 Cactus 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 Cactus i.e., Cactus and Halliburton go up and down completely randomly.
Pair Corralation between Cactus and Halliburton
Considering the 90-day investment horizon Cactus Inc is expected to generate 1.57 times more return on investment than Halliburton. However, Cactus is 1.57 times more volatile than Halliburton. It trades about 0.29 of its potential returns per unit of risk. Halliburton is currently generating about 0.33 per unit of risk. If you would invest 5,759 in Cactus Inc on August 28, 2024 and sell it today you would earn a total of 1,190 from holding Cactus Inc or generate 20.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cactus Inc vs. Halliburton
Performance |
| Timeline |
| Cactus Inc |
| Halliburton |
Cactus and Halliburton Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cactus and Halliburton
The main advantage of trading using opposite Cactus and Halliburton positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cactus 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.| Cactus vs. ChampionX | Cactus vs. Expro Group Holdings | Cactus vs. Ranger Energy Services | Cactus vs. MRC Global |
| 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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