Correlation Between La Z and Halliburton

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

Diversification Opportunities for La Z and Halliburton

0.4
  Correlation Coefficient

Very weak diversification

The 3 months correlation between La Z and Halliburton is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding La-Z-Boy and Halliburton in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Halliburton and La Z 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 La-Z-Boy 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 La Z i.e., La Z and Halliburton go up and down completely randomly.

Pair Corralation between La Z and Halliburton

Considering the 90-day investment horizon La-Z-Boy is expected to generate 0.74 times more return on investment than Halliburton. However, La-Z-Boy is 1.36 times less risky than Halliburton. It trades about -0.26 of its potential returns per unit of risk. Halliburton is currently generating about -0.2 per unit of risk. If you would invest  2,619  in La-Z-Boy on July 3, 2022 and sell it today you would lose (362.00)  from holding La-Z-Boy or give up 13.82% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

La-Z-Boy  vs.  Halliburton

 Performance (%) 
       Timeline  
La-Z-Boy 
La Z Performance
0 of 100
Over the last 90 days La-Z-Boy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

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

Halliburton Price Channel

La Z and Halliburton Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with La Z and Halliburton

The main advantage of trading using opposite La Z and Halliburton positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if La Z 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.
La Z vs. Amazon Inc
The idea behind La-Z-Boy 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. Amazon Inc
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.

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