Correlation Between Armada Hflr and Honeywell International

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

By analyzing existing cross correlation between Armada Hflr Pr and Honeywell International, you can compare the effects of market volatilities on Armada Hflr and Honeywell International 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 Armada Hflr with a short position of Honeywell International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Armada Hflr and Honeywell International.

Diversification Opportunities for Armada Hflr and Honeywell International

-0.35

Correlation Coefficient

Armada Hflr  Honeywell International

Very good diversification

The 3 months correlation between Armada and Honeywell is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Armada Hflr Pr and Honeywell International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Honeywell International and Armada Hflr 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 Armada Hflr Pr are associated (or correlated) with Honeywell International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Honeywell International has no effect on the direction of Armada Hflr i.e., Armada Hflr and Honeywell International go up and down completely randomly.

Pair Corralation between Armada Hflr and Honeywell International

Considering the 90-day investment horizon Armada Hflr is expected to generate 2.43 times less return on investment than Honeywell International. In addition to that, Armada Hflr is 1.34 times more volatile than Honeywell International. It trades about 0.01 of its total potential returns per unit of risk. Honeywell International is currently generating about 0.03 per unit of volatility. If you would invest  19,333  in Honeywell International on September 23, 2024 and sell it today you would earn a total of  2,667  from holding Honeywell International or generate 13.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.03%
Values	Daily Returns

Armada Hflr Pr  vs.  Honeywell International

Armada Hflr Pr

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Armada Hflr Pr has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Honeywell International

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Honeywell International are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Honeywell International reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Armada Hflr and Honeywell International

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

The idea behind Armada Hflr Pr and Honeywell International 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.