Correlation Between Canadian Natural and Halliburton

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

Diversification Opportunities for Canadian Natural and Halliburton

0.95
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Canadian and Halliburton is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Natural Resources and Halliburton in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Halliburton and Canadian Natural 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 Canadian Natural Resources 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 Canadian Natural i.e., Canadian Natural and Halliburton go up and down completely randomly.

Pair Corralation between Canadian Natural and Halliburton

Considering the 90-day investment horizon Canadian Natural Resources is expected to generate 0.85 times more return on investment than Halliburton. However, Canadian Natural Resources is 1.17 times less risky than Halliburton. It trades about -0.09 of its potential returns per unit of risk. Halliburton is currently generating about -0.08 per unit of risk. If you would invest  6,319  in Canadian Natural Resources on April 5, 2022 and sell it today you would lose (842.00)  from holding Canadian Natural Resources or give up 13.32% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Canadian Natural Resources  vs.  Halliburton

 Performance (%) 
      Timeline 
Canadian Natural Res 
Canadian Performance
0 of 100
Over the last 90 days Canadian Natural Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm insiders.

Structure and Payout Changes

Forward Annual Dividend Yield
0.0416
Payout Ratio
0.27
Last Split Factor
2:1
Forward Annual Dividend Rate
2.28
Dividend Date
2022-07-05
Ex Dividend Date
2022-06-16
Last Split Date
2010-06-01

Canadian 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

Canadian Natural and Halliburton Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Canadian Natural and Halliburton

The main advantage of trading using opposite Canadian Natural and Halliburton positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian Natural 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.

Canadian Natural Resources

Pair trading matchups for Canadian Natural

The idea behind Canadian Natural Resources 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 Transaction History module to view history of all your transactions and understand their impact on performance.

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