Correlation Between Halliburton and ChampionX

Can any of the company-specific risk be diversified away by investing in both Halliburton and ChampionX 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 ChampionX into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Halliburton and ChampionX, you can compare the effects of market volatilities on Halliburton and ChampionX 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 ChampionX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Halliburton and ChampionX.

Diversification Opportunities for Halliburton and ChampionX

0.83

Correlation Coefficient

Halliburton  ChampionX

Very poor diversification

The 3 months correlation between Halliburton and ChampionX is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Halliburton and ChampionX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ChampionX 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 ChampionX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ChampionX has no effect on the direction of Halliburton i.e., Halliburton and ChampionX go up and down completely randomly.

Pair Corralation between Halliburton and ChampionX

Assuming the 90 days horizon Halliburton is expected to generate 1.13 times more return on investment than ChampionX. However, Halliburton is 1.13 times more volatile than ChampionX. It trades about 0.01 of its potential returns per unit of risk. ChampionX is currently generating about -0.03 per unit of risk. If you would invest  2,583  in Halliburton on October 1, 2024 and sell it today you would earn a total of  5.00  from holding Halliburton or generate 0.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Halliburton  vs.  ChampionX

Halliburton

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Halliburton are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Halliburton is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

ChampionX

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ChampionX has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, ChampionX is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Halliburton and ChampionX

The main advantage of trading using opposite Halliburton and ChampionX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Halliburton position performs unexpectedly, ChampionX 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 ChampionX will offset losses from the drop in ChampionX's long position.

The idea behind Halliburton and ChampionX 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.

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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 Anywhere module to track or share privately all of your investments from the convenience of any device.