Correlation Between Halliburton and Procter Gamble

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

Diversification Opportunities for Halliburton and Procter Gamble

0.01
  Correlation Coefficient

Significant diversification

The 3 months correlation between Halliburton and Procter is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Halliburton and Procter Gamble in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Procter Gamble 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 Procter Gamble. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Procter Gamble has no effect on the direction of Halliburton i.e., Halliburton and Procter Gamble go up and down completely randomly.

Pair Corralation between Halliburton and Procter Gamble

Considering the 90-day investment horizon Halliburton is expected to under-perform the Procter Gamble. In addition to that, Halliburton is 2.11 times more volatile than Procter Gamble. It trades about -0.07 of its total potential returns per unit of risk. Procter Gamble is currently generating about 0.16 per unit of volatility. If you would invest  13,549  in Procter Gamble on May 20, 2022 and sell it today you would earn a total of  1,357  from holding Procter Gamble or generate 10.02% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Halliburton  vs.  Procter Gamble

 Performance (%) 
       Timeline  
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 weak performance in the last few months, the Stock's basic indicators remain relatively steady which may send shares a bit higher in September 2022. The new chaos may also be a sign of medium-term up-swing for the company stakeholders.

Halliburton Price Channel

Procter Gamble 
Procter Performance
5 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Procter Gamble are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Procter Gamble may actually be approaching a critical reversion point that can send shares even higher in September 2022.

Procter Price Channel

Halliburton and Procter Gamble Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Halliburton and Procter Gamble

The main advantage of trading using opposite Halliburton and Procter Gamble positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Halliburton position performs unexpectedly, Procter Gamble 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 Procter Gamble will offset losses from the drop in Procter Gamble's long position.
The idea behind Halliburton and Procter Gamble 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.

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