Correlation Between Select Energy and Halliburton

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

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

Diversification Opportunities for Select Energy and Halliburton

0.87

Correlation Coefficient

Select Energy  Halliburton

Very poor diversification

The 3 months correlation between Select and Halliburton is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Select Energy Services and Halliburton in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Halliburton and Select Energy 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 Select Energy Services 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 Select Energy i.e., Select Energy and Halliburton go up and down completely randomly.

Pair Corralation between Select Energy and Halliburton

Given the investment horizon of 90 days Select Energy is expected to generate 1.0 times less return on investment than Halliburton. In addition to that, Select Energy is 1.19 times more volatile than Halliburton. It trades about 0.06 of its total potential returns per unit of risk. Halliburton is currently generating about 0.07 per unit of volatility. If you would invest  1,969  in Halliburton on May 4, 2025 and sell it today you would earn a total of  191.00  from holding Halliburton or generate 9.7% return on investment over 90 days.

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

Select Energy Services  vs.  Halliburton

Select Energy Services

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Select Energy Services are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Select Energy may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Halliburton

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Halliburton are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Halliburton may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Select Energy and Halliburton

The main advantage of trading using opposite Select Energy and Halliburton positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Select Energy 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 Select Energy Services 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.

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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.