Correlation Between Halliburton and AGF Management

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

By analyzing existing cross correlation between Halliburton and AGF Management Limited, you can compare the effects of market volatilities on Halliburton and AGF Management 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 AGF Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of Halliburton and AGF Management.

Diversification Opportunities for Halliburton and AGF Management

0.45

Correlation Coefficient

Halliburton  AGF Management

Very weak diversification

The 3 months correlation between Halliburton and AGF is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Halliburton and AGF Management Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AGF Management 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 are associated (or correlated) with AGF Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AGF Management has no effect on the direction of Halliburton i.e., Halliburton and AGF Management go up and down completely randomly.

Pair Corralation between Halliburton and AGF Management

Assuming the 90 days trading horizon Halliburton is expected to generate 1.41 times more return on investment than AGF Management. However, Halliburton is 1.41 times more volatile than AGF Management Limited. It trades about -0.07 of its potential returns per unit of risk. AGF Management Limited is currently generating about -0.15 per unit of risk. If you would invest  2,740  in Halliburton on October 10, 2024 and sell it today you would lose (64.00) from holding Halliburton or give up 2.34% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Halliburton  vs.  AGF Management Limited

Halliburton

Risk-Adjusted Performance

0 of 100

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 rather sound essential indicators, Halliburton is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

AGF Management

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in AGF Management Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, AGF Management is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Halliburton and AGF Management

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

The idea behind Halliburton and AGF Management Limited 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.

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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.