Correlation Between NOV and Halliburton

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

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

Diversification Opportunities for NOV and Halliburton

0.46

Correlation Coefficient

NOV  Halliburton

Very weak diversification

The 3 months correlation between NOV and Halliburton is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding NOV Inc and Halliburton in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Halliburton and NOV 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 NOV Inc 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 NOV i.e., NOV and Halliburton go up and down completely randomly.

Pair Corralation between NOV and Halliburton

Assuming the 90 days horizon NOV Inc is expected to generate 1.1 times more return on investment than Halliburton. However, NOV is 1.1 times more volatile than Halliburton. It trades about -0.04 of its potential returns per unit of risk. Halliburton is currently generating about -0.14 per unit of risk. If you would invest  1,532  in NOV Inc on December 3, 2024 and sell it today you would lose (114.00) from holding NOV Inc or give up 7.44% of portfolio value over 90 days.

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

NOV Inc  vs.  Halliburton

NOV Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days NOV Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

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. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with NOV and Halliburton

The main advantage of trading using opposite NOV and Halliburton positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NOV 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 NOV Inc 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.