Correlation Between Costco Wholesale and Halliburton
Can any of the company-specific risk be diversified away by investing in both Costco Wholesale 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 Costco Wholesale and Halliburton into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Costco Wholesale and Halliburton, you can compare the effects of market volatilities on Costco Wholesale 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 Costco Wholesale with a short position of Halliburton. Check out your portfolio center. Please also check ongoing floating volatility patterns of Costco Wholesale and Halliburton.
Diversification Opportunities for Costco Wholesale and Halliburton
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Costco and Halliburton is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Costco Wholesale and Halliburton in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Halliburton and Costco Wholesale 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 Costco Wholesale 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 Costco Wholesale i.e., Costco Wholesale and Halliburton go up and down completely randomly.
Pair Corralation between Costco Wholesale and Halliburton
Assuming the 90 days trading horizon Costco Wholesale is expected to generate 0.69 times more return on investment than Halliburton. However, Costco Wholesale is 1.45 times less risky than Halliburton. It trades about 0.12 of its potential returns per unit of risk. Halliburton is currently generating about 0.0 per unit of risk. If you would invest 6,297 in Costco Wholesale on October 20, 2024 and sell it today you would earn a total of 8,201 from holding Costco Wholesale or generate 130.24% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 99.19% |
Values | Daily Returns |
Costco Wholesale vs. Halliburton
Performance |
Timeline |
Costco Wholesale |
Halliburton |
Costco Wholesale and Halliburton Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Costco Wholesale and Halliburton
The main advantage of trading using opposite Costco Wholesale and Halliburton positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Costco Wholesale 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.Costco Wholesale vs. Technos SA | Costco Wholesale vs. Take Two Interactive Software | Costco Wholesale vs. Micron Technology | Costco Wholesale vs. GX AI TECH |
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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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