Correlation Between Pfizer and Halliburton
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 Co, 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
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Pfizer and Halliburton is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and Halliburton Co 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
Assuming the 90 days trading 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 1.59 times less risky than Halliburton. The stock trades about -0.3 of its potential returns per unit of risk. The Halliburton Co is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 1,767,491 in Halliburton Co on September 15, 2024 and sell it today you would lose (207,491) from holding Halliburton Co or give up 11.74% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Pfizer Inc vs. Halliburton Co
Performance |
Timeline |
Pfizer Inc |
Halliburton |
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.Pfizer vs. Edesa Holding SA | Pfizer vs. Vista Energy, SAB | Pfizer vs. United States Steel | Pfizer vs. Central Puerto SA |
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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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