Correlation Between Halliburton and Now
Can any of the company-specific risk be diversified away by investing in both Halliburton and Now 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 Now into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Halliburton and Now Inc, you can compare the effects of market volatilities on Halliburton and Now 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 Now. Check out your portfolio center. Please also check ongoing floating volatility patterns of Halliburton and Now.
Diversification Opportunities for Halliburton and Now
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Halliburton and Now is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Halliburton and Now Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Now Inc 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 Now. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Now Inc has no effect on the direction of Halliburton i.e., Halliburton and Now go up and down completely randomly.
Pair Corralation between Halliburton and Now
Considering the 90-day investment horizon Halliburton is expected to generate 1.71 times less return on investment than Now. But when comparing it to its historical volatility, Halliburton is 1.22 times less risky than Now. It trades about 0.2 of its potential returns per unit of risk. Now Inc is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 1,266 in Now Inc on January 18, 2024 and sell it today you would earn a total of 224.00 from holding Now Inc or generate 17.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Halliburton vs. Now Inc
Performance |
| Timeline |
| Halliburton |
| Now Inc |
Halliburton and Now Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Halliburton and Now
The main advantage of trading using opposite Halliburton and Now positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Halliburton position performs unexpectedly, Now 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 Now will offset losses from the drop in Now's long position.The idea behind Halliburton and Now Inc 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.| Now vs. Oil States International | Now vs. Oceaneering International | Now vs. Geospace Technologies | Now vs. Newpark Resources |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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