Correlation Between BW Offshore and Halliburton

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

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

Diversification Opportunities for BW Offshore and Halliburton

0.0

Correlation Coefficient

BW Offshore  Halliburton

Pay attention - limited upside

The 3 months correlation between BGSWF and Halliburton is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding BW Offshore Limited and Halliburton in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Halliburton and BW Offshore 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 BW Offshore Limited 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 BW Offshore i.e., BW Offshore and Halliburton go up and down completely randomly.

Pair Corralation between BW Offshore and Halliburton

If you would invest (100.00) in BW Offshore Limited on January 19, 2024 and sell it today you would earn a total of  100.00  from holding BW Offshore Limited or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

BW Offshore Limited  vs.  Halliburton

BW Offshore Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BW Offshore Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, BW Offshore is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Halliburton

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Halliburton are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain basic indicators, Halliburton disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BW Offshore and Halliburton

The main advantage of trading using opposite BW Offshore and Halliburton positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BW Offshore 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 BW Offshore Limited 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.