Correlation Between Halliburton and Newpark Resources
Can any of the company-specific risk be diversified away by investing in both Halliburton and Newpark Resources 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 Newpark Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Halliburton and Newpark Resources, you can compare the effects of market volatilities on Halliburton and Newpark Resources 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 Newpark Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Halliburton and Newpark Resources.
Diversification Opportunities for Halliburton and Newpark Resources
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Halliburton and Newpark is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Halliburton and Newpark Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newpark Resources 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 Newpark Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newpark Resources has no effect on the direction of Halliburton i.e., Halliburton and Newpark Resources go up and down completely randomly.
Pair Corralation between Halliburton and Newpark Resources
Considering the 90-day investment horizon Halliburton is expected to under-perform the Newpark Resources. But the stock apears to be less risky and, when comparing its historical volatility, Halliburton is 1.11 times less risky than Newpark Resources. The stock trades about -0.14 of its potential returns per unit of risk. The Newpark Resources is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest 749.00 in Newpark Resources on January 30, 2024 and sell it today you would lose (22.00) from holding Newpark Resources or give up 2.94% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 95.45% |
Values | Daily Returns |
Halliburton vs. Newpark Resources
Performance |
Timeline |
Halliburton |
Newpark Resources |
Halliburton and Newpark Resources Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Halliburton and Newpark Resources
The main advantage of trading using opposite Halliburton and Newpark Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Halliburton position performs unexpectedly, Newpark Resources 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 Newpark Resources will offset losses from the drop in Newpark Resources' long position.Halliburton vs. Bristow Group | Halliburton vs. ChampionX | Halliburton vs. NOV Inc | Halliburton vs. Cactus Inc |
Newpark Resources vs. Oceaneering International | Newpark Resources vs. Helix Energy Solutions | Newpark Resources vs. Ranger Energy Services | Newpark Resources vs. Now Inc |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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