Correlation Between Halliburton and Banco Bradesco

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

By analyzing existing cross correlation between Halliburton Co and Banco Bradesco DRC, you can compare the effects of market volatilities on Halliburton and Banco Bradesco 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 Banco Bradesco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Halliburton and Banco Bradesco.

Diversification Opportunities for Halliburton and Banco Bradesco

0.77

Correlation Coefficient

Halliburton  Banco Bradesco

Poor diversification

The 3 months correlation between Halliburton and Banco is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Halliburton Co and Banco Bradesco DRC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco Bradesco DRC 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 Co are associated (or correlated) with Banco Bradesco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banco Bradesco DRC has no effect on the direction of Halliburton i.e., Halliburton and Banco Bradesco go up and down completely randomly.

Pair Corralation between Halliburton and Banco Bradesco

Assuming the 90 days trading horizon Halliburton Co is expected to under-perform the Banco Bradesco. In addition to that, Halliburton is 1.58 times more volatile than Banco Bradesco DRC. It trades about -0.05 of its total potential returns per unit of risk. Banco Bradesco DRC is currently generating about 0.01 per unit of volatility. If you would invest  299,250  in Banco Bradesco DRC on March 21, 2024 and sell it today you would earn a total of  50.00  from holding Banco Bradesco DRC or generate 0.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Halliburton Co  vs.  Banco Bradesco DRC

Halliburton

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Halliburton Co has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Banco Bradesco DRC

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Halliburton and Banco Bradesco

The main advantage of trading using opposite Halliburton and Banco Bradesco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Halliburton position performs unexpectedly, Banco Bradesco 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 Banco Bradesco will offset losses from the drop in Banco Bradesco's long position.

The idea behind Halliburton Co and Banco Bradesco DRC 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.