Correlation Between Retail Estates and Halliburton

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

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

Diversification Opportunities for Retail Estates and Halliburton

-0.44

Correlation Coefficient

Retail Estates  Halliburton

Very good diversification

The 3 months correlation between Retail and Halliburton is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Retail Estates NV and Halliburton in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Halliburton and Retail Estates 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 Retail Estates NV 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 Retail Estates i.e., Retail Estates and Halliburton go up and down completely randomly.

Pair Corralation between Retail Estates and Halliburton

Assuming the 90 days horizon Retail Estates NV is expected to under-perform the Halliburton. But the stock apears to be less risky and, when comparing its historical volatility, Retail Estates NV is 2.07 times less risky than Halliburton. The stock trades about -0.17 of its potential returns per unit of risk. The Halliburton is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  2,558  in Halliburton on October 26, 2024 and sell it today you would earn a total of  169.00  from holding Halliburton or generate 6.61% return on investment over 90 days.

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

Retail Estates NV  vs.  Halliburton

Retail Estates NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Retail Estates NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain 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

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Halliburton are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain essential indicators, Halliburton may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Retail Estates and Halliburton

The main advantage of trading using opposite Retail Estates and Halliburton positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Retail Estates 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 Retail Estates NV 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.

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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..