Correlation Between United States and Halliburton
Can any of the company-specific risk be diversified away by investing in both United 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 United States and Halliburton into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United States Steel and Halliburton, you can compare the effects of market volatilities on United 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 United States with a short position of Halliburton. Check out your portfolio center. Please also check ongoing floating volatility patterns of United States and Halliburton.
Diversification Opportunities for United States and Halliburton
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between United and Halliburton is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding United States Steel and Halliburton in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Halliburton and United 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 United States Steel 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 United States i.e., United States and Halliburton go up and down completely randomly.
Pair Corralation between United States and Halliburton
Given the investment horizon of 90 days United States Steel is expected to generate 1.32 times more return on investment than Halliburton. However, United States is 1.32 times more volatile than Halliburton. It trades about 0.04 of its potential returns per unit of risk. Halliburton is currently generating about -0.01 per unit of risk. If you would invest 49,512 in United States Steel on September 14, 2024 and sell it today you would earn a total of 20,359 from holding United States Steel or generate 41.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United States Steel vs. Halliburton
Performance |
| Timeline |
| United States Steel |
| Halliburton |
United States and Halliburton Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United States and Halliburton
The main advantage of trading using opposite United States and Halliburton positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United 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.| United States vs. Steel Dynamics | United States vs. Companhia Siderrgica Nacional | United States vs. The Select Sector | United States vs. Promotora y Operadora |
| Halliburton vs. Verizon Communications | Halliburton vs. Martin Marietta Materials | Halliburton vs. United States Steel | Halliburton vs. Grupo Carso SAB |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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