Correlation Between United States and Halliburton

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

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

Diversification Opportunities for United States and Halliburton

0.68

Correlation Coefficient

United States  Halliburton

Poor diversification

The 3 months correlation between United and Halliburton is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding United States Steel and Halliburton Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Halliburton and United States 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 United States Steel 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 United States i.e., United States and Halliburton go up and down completely randomly.

Pair Corralation between United States and Halliburton

Given the investment horizon of 90 days United States Steel is expected to under-perform the Halliburton. In addition to that, United States is 1.44 times more volatile than Halliburton Co. It trades about 0.0 of its total potential returns per unit of risk. Halliburton Co is currently generating about 0.04 per unit of volatility. If you would invest  1,649,992  in Halliburton Co on October 25, 2024 and sell it today you would earn a total of  67,508  from holding Halliburton Co or generate 4.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

United States Steel  vs.  Halliburton Co

United States Steel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days United States Steel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, United States is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Halliburton

Risk-Adjusted Performance

3 of 100

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.

Pair Trading with United States and Halliburton

The main advantage of trading using opposite United States and Halliburton positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United States 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 United States Steel and Halliburton Co 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.