Correlation Between Halliburton and Schlumberger

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

Diversification Opportunities for Halliburton and Schlumberger

0.97
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Halliburton and Schlumberger is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Halliburton and Schlumberger NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schlumberger NV 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 Schlumberger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schlumberger NV has no effect on the direction of Halliburton i.e., Halliburton and Schlumberger go up and down completely randomly.

Pair Corralation between Halliburton and Schlumberger

Considering the 90-day investment horizon Halliburton is expected to generate 1.03 times more return on investment than Schlumberger. However, Halliburton is 1.03 times more volatile than Schlumberger NV. It trades about 0.07 of its potential returns per unit of risk. Schlumberger NV is currently generating about 0.07 per unit of risk. If you would invest  1,231  in Halliburton on May 17, 2022 and sell it today you would earn a total of  1,619  from holding Halliburton or generate 131.52% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Halliburton  vs.  Schlumberger NV

 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

Schlumberger NV 
Schlumberger Performance
0 of 100
Over the last 90 days Schlumberger NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's essential indicators remain somewhat strong which may send shares a bit higher in September 2022. The current disturbance may also be a sign of long term up-swing for the company investors.

Schlumberger Price Channel

Halliburton and Schlumberger Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Halliburton and Schlumberger

The main advantage of trading using opposite Halliburton and Schlumberger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Halliburton position performs unexpectedly, Schlumberger 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 Schlumberger will offset losses from the drop in Schlumberger's long position.
The idea behind Halliburton and Schlumberger 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.
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.

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