Correlation Between Halliburton and Core Laboratories

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

Diversification Opportunities for Halliburton and Core Laboratories

0.96
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Halliburton and Core Laboratories is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Halliburton and Core Laboratories NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Core Laboratories 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 are associated (or correlated) with Core Laboratories. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Core Laboratories has no effect on the direction of Halliburton i.e., Halliburton and Core Laboratories go up and down completely randomly.

Pair Corralation between Halliburton and Core Laboratories

Considering the 90-day investment horizon Halliburton is expected to generate 0.81 times more return on investment than Core Laboratories. However, Halliburton is 1.24 times less risky than Core Laboratories. It trades about 0.08 of its potential returns per unit of risk. Core Laboratories NV is currently generating about 0.01 per unit of risk. If you would invest  2,324  in Halliburton on September 5, 2022 and sell it today you would earn a total of  1,563  from holding Halliburton or generate 67.25% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Halliburton  vs.  Core Laboratories NV

 Performance (%) 
       Timeline  
Halliburton 
Halliburton Performance
11 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Halliburton are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively sluggish basic indicators, Halliburton revealed solid returns over the last few months and may actually be approaching a breakup point.

Halliburton Price Channel

Core Laboratories 
Core Laboratories Performance
8 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Core Laboratories NV are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat sluggish essential indicators, Core Laboratories sustained solid returns over the last few months and may actually be approaching a breakup point.

Core Laboratories Price Channel

Halliburton and Core Laboratories Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Halliburton and Core Laboratories

The main advantage of trading using opposite Halliburton and Core Laboratories positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Halliburton position performs unexpectedly, Core Laboratories 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 Core Laboratories will offset losses from the drop in Core Laboratories' long position.
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The idea behind Halliburton and Core Laboratories NV 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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Core Laboratories vs. Enerflex
Core Laboratories vs. Flotek Industries
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..

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