Correlation Between Thermo Fisher and Halliburton

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

By analyzing existing cross correlation between Thermo Fisher Scientific and Halliburton, you can compare the effects of market volatilities on Thermo Fisher 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 Thermo Fisher with a short position of Halliburton. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thermo Fisher and Halliburton.

Diversification Opportunities for Thermo Fisher and Halliburton

-0.36

Correlation Coefficient

Thermo Fisher  Halliburton

Very good diversification

The 3 months correlation between Thermo and Halliburton is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Thermo Fisher Scientific and Halliburton in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Halliburton and Thermo Fisher 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 Thermo Fisher Scientific 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 Thermo Fisher i.e., Thermo Fisher and Halliburton go up and down completely randomly.

Pair Corralation between Thermo Fisher and Halliburton

Assuming the 90 days trading horizon Thermo Fisher Scientific is expected to under-perform the Halliburton. But the stock apears to be less risky and, when comparing its historical volatility, Thermo Fisher Scientific is 2.28 times less risky than Halliburton. The stock trades about -0.12 of its potential returns per unit of risk. The Halliburton is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  55,000  in Halliburton on September 25, 2024 and sell it today you would lose (2,500) from holding Halliburton or give up 4.55% of portfolio value over 90 days.

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

Thermo Fisher Scientific  vs.  Halliburton

Thermo Fisher Scientific

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Thermo Fisher Scientific has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak 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.

Halliburton

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Halliburton has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong essential indicators, Halliburton is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Thermo Fisher and Halliburton

The main advantage of trading using opposite Thermo Fisher and Halliburton positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thermo Fisher 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 Thermo Fisher Scientific 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 the Bonds Directory module to find actively traded corporate debentures issued by US companies.