Correlation Between Honeywell International and Sumitomo

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Honeywell International and Sumitomo 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 Honeywell International and Sumitomo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Honeywell International and Sumitomo, you can compare the effects of market volatilities on Honeywell International and Sumitomo 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 Honeywell International with a short position of Sumitomo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Honeywell International and Sumitomo.

Diversification Opportunities for Honeywell International and Sumitomo

-0.02
  Correlation Coefficient

Good diversification

The 3 months correlation between Honeywell and Sumitomo is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Honeywell International and Sumitomo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sumitomo and Honeywell International 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 Honeywell International are associated (or correlated) with Sumitomo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sumitomo has no effect on the direction of Honeywell International i.e., Honeywell International and Sumitomo go up and down completely randomly.

Pair Corralation between Honeywell International and Sumitomo

Assuming the 90 days trading horizon Honeywell International is expected to generate 0.49 times more return on investment than Sumitomo. However, Honeywell International is 2.02 times less risky than Sumitomo. It trades about 0.0 of its potential returns per unit of risk. Sumitomo is currently generating about 0.0 per unit of risk. If you would invest  21,980  in Honeywell International on September 23, 2024 and sell it today you would lose (35.00) from holding Honeywell International or give up 0.16% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Honeywell International  vs.  Sumitomo

 Performance 
       Timeline  
Honeywell International 

Risk-Adjusted Performance

16 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Honeywell International are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile fundamental indicators, Honeywell International unveiled solid returns over the last few months and may actually be approaching a breakup point.
Sumitomo 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Sumitomo has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable primary indicators, Sumitomo is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Honeywell International and Sumitomo Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Honeywell International and Sumitomo

The main advantage of trading using opposite Honeywell International and Sumitomo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Honeywell International position performs unexpectedly, Sumitomo 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 Sumitomo will offset losses from the drop in Sumitomo's long position.
The idea behind Honeywell International and Sumitomo 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.

Other Complementary Tools

Price Exposure Probability
Analyze equity upside and downside potential for a given time horizon across multiple markets
Technical Analysis
Check basic technical indicators and analysis based on most latest market data
FinTech Suite
Use AI to screen and filter profitable investment opportunities
Positions Ratings
Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance
Portfolio Rebalancing
Analyze risk-adjusted returns against different time horizons to find asset-allocation targets