Correlation Between Halliburton and Pfizer

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

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

Diversification Opportunities for Halliburton and Pfizer

-0.09

Correlation Coefficient

Halliburton  Pfizer

Good diversification

The 3 months correlation between Halliburton and Pfizer is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Halliburton Co and Pfizer Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pfizer Inc and Halliburton 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 Halliburton Co are associated (or correlated) with Pfizer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pfizer Inc has no effect on the direction of Halliburton i.e., Halliburton and Pfizer go up and down completely randomly.

Pair Corralation between Halliburton and Pfizer

Assuming the 90 days trading horizon Halliburton is expected to generate 1.75 times less return on investment than Pfizer. In addition to that, Halliburton is 1.59 times more volatile than Pfizer Inc. It trades about 0.04 of its total potential returns per unit of risk. Pfizer Inc is currently generating about 0.11 per unit of volatility. If you would invest  778,000  in Pfizer Inc on December 22, 2024 and sell it today you would earn a total of  67,000  from holding Pfizer Inc or generate 8.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Halliburton Co  vs.  Pfizer Inc

Halliburton

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Halliburton Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong essential indicators, Halliburton is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pfizer Inc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pfizer Inc are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Pfizer may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Halliburton and Pfizer

The main advantage of trading using opposite Halliburton and Pfizer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Halliburton position performs unexpectedly, Pfizer 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 Pfizer will offset losses from the drop in Pfizer's long position.

The idea behind Halliburton Co and Pfizer Inc 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.