Correlation Between Coor Service and Honeywell International

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

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

Diversification Opportunities for Coor Service and Honeywell International

-0.36

Correlation Coefficient

Coor Service  Honeywell International

Very good diversification

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

Pair Corralation between Coor Service and Honeywell International

Assuming the 90 days horizon Coor Service Management is expected to generate 2.26 times more return on investment than Honeywell International. However, Coor Service is 2.26 times more volatile than Honeywell International. It trades about 0.04 of its potential returns per unit of risk. Honeywell International is currently generating about -0.11 per unit of risk. If you would invest  284.00  in Coor Service Management on December 23, 2024 and sell it today you would earn a total of  12.00  from holding Coor Service Management or generate 4.23% return on investment over 90 days.

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

Coor Service Management  vs.  Honeywell International

Coor Service Management

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Coor Service Management are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Coor Service may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Honeywell International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Honeywell International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Coor Service and Honeywell International

The main advantage of trading using opposite Coor Service and Honeywell International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coor Service 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 Coor Service Management 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.