Correlation Between Halliburton and Virtus Investment

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

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

Diversification Opportunities for Halliburton and Virtus Investment

0.46

Correlation Coefficient

Halliburton  Virtus Investment

Very weak diversification

The 3 months correlation between Halliburton and Virtus is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Halliburton and Virtus Investment Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Investment 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 Virtus Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Investment has no effect on the direction of Halliburton i.e., Halliburton and Virtus Investment go up and down completely randomly.

Pair Corralation between Halliburton and Virtus Investment

Assuming the 90 days trading horizon Halliburton is expected to under-perform the Virtus Investment. But the stock apears to be less risky and, when comparing its historical volatility, Halliburton is 1.03 times less risky than Virtus Investment. The stock trades about -0.03 of its potential returns per unit of risk. The Virtus Investment Partners is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  18,792  in Virtus Investment Partners on October 12, 2024 and sell it today you would earn a total of  1,808  from holding Virtus Investment Partners or generate 9.62% return on investment over 90 days.

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

Halliburton  vs.  Virtus Investment Partners

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 comparatively stable essential indicators, Halliburton is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Virtus Investment

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus Investment Partners are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Virtus Investment may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Halliburton and Virtus Investment

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

The idea behind Halliburton and Virtus Investment Partners 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.