Correlation Between Visa and Halliburton
Can any of the company-specific risk be diversified away by investing in both Visa 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 Visa and Halliburton into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Visa Class A and Halliburton, you can compare the effects of market volatilities on Visa 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 Visa with a short position of Halliburton. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Halliburton.
Diversification Opportunities for Visa and Halliburton
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Visa and Halliburton is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Halliburton in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Halliburton and Visa 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 Visa Class A 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 Visa i.e., Visa and Halliburton go up and down completely randomly.
Pair Corralation between Visa and Halliburton
Taking into account the 90-day investment horizon Visa is expected to generate 1.15 times less return on investment than Halliburton. But when comparing it to its historical volatility, Visa Class A is 2.07 times less risky than Halliburton. It trades about 0.08 of its potential returns per unit of risk. Halliburton is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 3,265 in Halliburton on January 20, 2024 and sell it today you would earn a total of 600.00 from holding Halliburton or generate 18.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Visa Class A vs. Halliburton
Performance |
| Timeline |
| Visa Class A |
| Halliburton |
Visa and Halliburton Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Halliburton
The main advantage of trading using opposite Visa and Halliburton positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa 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.| Visa vs. American Express | Visa vs. Capital One Financial | Visa vs. Upstart HoldingsInc | Visa vs. Ally Financial |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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