Correlation Between Home Depot and Halliburton

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

Diversification Opportunities for Home Depot and Halliburton

0.02
  Correlation Coefficient

Significant diversification

The 3 months correlation between Home Depot and Halliburton is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and Halliburton in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Halliburton and Home Depot 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 Home Depot 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 Home Depot i.e., Home Depot and Halliburton go up and down completely randomly.

Pair Corralation between Home Depot and Halliburton

Allowing for the 90-day total investment horizon Home Depot is expected to generate 29.32 times less return on investment than Halliburton. But when comparing it to its historical volatility, Home Depot is 2.01 times less risky than Halliburton. It trades about 0.0 of its potential returns per unit of risk. Halliburton is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,263  in Halliburton on June 30, 2022 and sell it today you would earn a total of  1,113  from holding Halliburton or generate 88.12% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Home Depot  vs.  Halliburton

 Performance (%) 
       Timeline  
Home Depot 
Home Depot Performance
0 of 100
Over the last 90 days Home Depot has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Home Depot is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

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

Halliburton Price Channel

Home Depot and Halliburton Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Home Depot and Halliburton

The main advantage of trading using opposite Home Depot and Halliburton positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot 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.
Home Depot vs. Kibush Capital Corp
The idea behind Home Depot 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.
Halliburton vs. Kibush Capital Corp
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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