Correlation Between ARISTOCRAT LEISURE and Halliburton

Can any of the company-specific risk be diversified away by investing in both ARISTOCRAT LEISURE 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 ARISTOCRAT LEISURE and Halliburton into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ARISTOCRAT LEISURE and Halliburton, you can compare the effects of market volatilities on ARISTOCRAT LEISURE 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 ARISTOCRAT LEISURE with a short position of Halliburton. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARISTOCRAT LEISURE and Halliburton.

Diversification Opportunities for ARISTOCRAT LEISURE and Halliburton

0.31

Correlation Coefficient

ARISTOCRAT LEISURE  Halliburton

Weak diversification

The 3 months correlation between ARISTOCRAT and Halliburton is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding ARISTOCRAT LEISURE and Halliburton in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Halliburton and ARISTOCRAT LEISURE 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 ARISTOCRAT LEISURE 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 ARISTOCRAT LEISURE i.e., ARISTOCRAT LEISURE and Halliburton go up and down completely randomly.

Pair Corralation between ARISTOCRAT LEISURE and Halliburton

Assuming the 90 days trading horizon ARISTOCRAT LEISURE is expected to under-perform the Halliburton. But the stock apears to be less risky and, when comparing its historical volatility, ARISTOCRAT LEISURE is 1.39 times less risky than Halliburton. The stock trades about -0.08 of its potential returns per unit of risk. The Halliburton is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  2,543  in Halliburton on December 25, 2024 and sell it today you would lose (196.00) from holding Halliburton or give up 7.71% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

ARISTOCRAT LEISURE  vs.  Halliburton

ARISTOCRAT LEISURE

Risk-Adjusted Performance

Very Weak

Over the last 90 days ARISTOCRAT LEISURE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Halliburton

Risk-Adjusted Performance

Very Weak

Over the last 90 days Halliburton has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's essential indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with ARISTOCRAT LEISURE and Halliburton

The main advantage of trading using opposite ARISTOCRAT LEISURE and Halliburton positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ARISTOCRAT LEISURE 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.

The idea behind ARISTOCRAT LEISURE and Halliburton pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.