Correlation Between Halliburton and Enel Generacion
Can any of the company-specific risk be diversified away by investing in both Halliburton and Enel Generacion 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 Enel Generacion into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Halliburton Co and Enel Generacion Costanera, you can compare the effects of market volatilities on Halliburton and Enel Generacion 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 Enel Generacion. Check out your portfolio center. Please also check ongoing floating volatility patterns of Halliburton and Enel Generacion.
Diversification Opportunities for Halliburton and Enel Generacion
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Halliburton and Enel is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Halliburton Co and Enel Generacion Costanera in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enel Generacion Costanera 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 Co are associated (or correlated) with Enel Generacion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enel Generacion Costanera has no effect on the direction of Halliburton i.e., Halliburton and Enel Generacion go up and down completely randomly.
Pair Corralation between Halliburton and Enel Generacion
Assuming the 90 days trading horizon Halliburton Co is expected to under-perform the Enel Generacion. But the stock apears to be less risky and, when comparing its historical volatility, Halliburton Co is 1.03 times less risky than Enel Generacion. The stock trades about -0.07 of its potential returns per unit of risk. The Enel Generacion Costanera is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 33,950 in Enel Generacion Costanera on September 15, 2024 and sell it today you would earn a total of 13,750 from holding Enel Generacion Costanera or generate 40.5% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Halliburton Co vs. Enel Generacion Costanera
Performance |
Timeline |
Halliburton |
Enel Generacion Costanera |
Halliburton and Enel Generacion Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Halliburton and Enel Generacion
The main advantage of trading using opposite Halliburton and Enel Generacion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Halliburton position performs unexpectedly, Enel Generacion 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 Enel Generacion will offset losses from the drop in Enel Generacion's long position.Halliburton vs. Harmony Gold Mining | Halliburton vs. Transportadora de Gas | Halliburton vs. Agrometal SAI | Halliburton vs. Compania de Transporte |
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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 the Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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