Correlation Between Archrock and Halliburton

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Can any of the company-specific risk be diversified away by investing in both Archrock 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 Archrock and Halliburton into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Archrock and Halliburton, you can compare the effects of market volatilities on Archrock 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 Archrock with a short position of Halliburton. Check out your portfolio center. Please also check ongoing floating volatility patterns of Archrock and Halliburton.

Diversification Opportunities for Archrock and Halliburton

0.94
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Archrock and Halliburton is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Archrock and Halliburton in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Halliburton and Archrock 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 Archrock 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 Archrock i.e., Archrock and Halliburton go up and down completely randomly.

Pair Corralation between Archrock and Halliburton

Given the investment horizon of 90 days Archrock is expected to generate 3.35 times less return on investment than Halliburton. But when comparing it to its historical volatility, Archrock is 1.22 times less risky than Halliburton. It trades about 0.02 of its potential returns per unit of risk. Halliburton is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  2,138  in Halliburton on April 4, 2022 and sell it today you would earn a total of  1,005  from holding Halliburton or generate 47.01% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Archrock  vs.  Halliburton

 Performance (%) 
      Timeline 
Archrock 
Archrock Performance
0 of 100
Over the last 90 days Archrock has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Structure and Payout Changes

Forward Annual Dividend Yield
0.0691
Payout Ratio
0.0341
Last Split Factor
13:40
Forward Annual Dividend Rate
0.58
Dividend Date
2021-08-16
Ex Dividend Date
2022-05-09
Last Split Date
2007-08-21

Archrock Price Channel

Halliburton 
Halliburton Performance
0 of 100
Over the last 90 days Halliburton has generated negative risk-adjusted returns adding no value to investors with long positions. Even with fragile performance in the last few months, the Stock's basic indicators remain relatively steady which may send shares a bit higher in August 2022. The new chaos may also be a sign of medium-term up-swing for the company stakeholders.

Structure and Payout Changes

Forward Annual Dividend Yield
0.0153
Payout Ratio
0.26
Last Split Factor
2:1
Forward Annual Dividend Rate
0.48
Dividend Date
2022-06-22
Ex Dividend Date
2022-05-31
Last Split Date
2006-07-17

Halliburton Price Channel

Archrock and Halliburton Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Archrock and Halliburton

The main advantage of trading using opposite Archrock and Halliburton positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Archrock 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 Archrock 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.
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.

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