Correlation Between Pfizer and Halliburton

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

Diversification Opportunities for Pfizer and Halliburton

0.34
  Correlation Coefficient

Weak diversification

The 3 months correlation between Pfizer and Halliburton is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and Halliburton in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Halliburton and Pfizer 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 Pfizer Inc 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 Pfizer i.e., Pfizer and Halliburton go up and down completely randomly.

Pair Corralation between Pfizer and Halliburton

Considering the 90-day investment horizon Pfizer Inc is expected to under-perform the Halliburton. But the stock apears to be less risky and, when comparing its historical volatility, Pfizer Inc is 1.93 times less risky than Halliburton. The stock trades about -0.07 of its potential returns per unit of risk. The Halliburton is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  2,926  in Halliburton on May 21, 2022 and sell it today you would earn a total of  13.00  from holding Halliburton or generate 0.44% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Pfizer Inc  vs.  Halliburton

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

Pfizer 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 unfluctuating 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

Pfizer and Halliburton Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Pfizer and Halliburton

The main advantage of trading using opposite Pfizer and Halliburton positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pfizer 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.
The idea behind Pfizer Inc 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.
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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